Demand for coal, both the thermal variety used for generating electricity and the metallurgical coal used in steel making, declined in 2011 as coal-fired plants have been shut down in favor of gas-fired plants and demand for steel has dropped.

In the US, gas-fired plants account for about 39% of total generation capacity, but these plants have traditionally been used to meet demand spikes because natural gas was more expensive than coal. With gas prices so low (about $2.49/thousand cubic feet today), coal miners have to lower prices or reduce production or both.

A quick look at coal mining companies’ valuations is enlightening.

Alpha’s share price at around noon today is $23.19 in a 52-week range of $15.49-$61.66. The consensus target price on the stock is $29.50, for a potential upside of 27%.

Patriot’s share price is $9.19 in a 52-week range of $6.92-$27.56. The consensus price target on the stock is $11.50, for a potential upside of 25%.

Peabody’s share price is $38.38 in a 52-week range of $30.60-$73.95. The consensus price target for the stock is $49, for a potential gain of about 28%.

Consol’s share price today is $37.34 in a 52-week range of $30.56-$56.32. The consensus price target is $50, for a potential upside of 34%.

Arch Coal’s share price is $15.39 in a 52-week range of $13.09-$36.99. The consensus price target is $22, for a potential upside of about 43%.

Market Vectors Coal ETF (NYSE: KOL) is down 0.4% at $37.17 and is 52-week trading range is $27.42 to $51.87.

Share price highs for all the coal miners is down by -24% to -64%, with Consol down the least and Patriot down the most. Our pick from among these would have to be Peabody, primarily for its strength overseas. The others are either closing shafts or soon will be.

The boom in shale gas production not only weighs down natural gas prices, but will continue to weigh on coal prices. About the only thing that can help here, is lower natural gas production, and that may be starting to happen.

Paul Ausick

The unofficial closing bells put the DJIA down nearly 49 points to 12,422.06 (-0.39%), the NASDAQ fell more than 14 points (-0.51%) to 2,710.67, and the S&P 500 fell -0.49% or more than 6 points to 1,289.10.

There were several analyst upgrades and downgrades today, including VMWare Inc. (NYSE: VMW) cut to ‘sell’ with a target price of $80 at Citigroup; American International Group Inc. (NYSE: AIG) started as ‘hold’ at Stifel Nicolaus; The Charles Schwab Corp. (NYSE: SCHW) cut to ‘market perform’ at Wells Fargo; Chesapeake Energy Corp. (NYSE: CHK) reiterated as ‘sell’ with lower estimates at Argus; and Citrix Systems Inc. (NASDAQ: CTXS) raised to ‘buy’ from ‘neutral’ at Citigroup.

Earnings reports since markets closed yesterday have led to some price changes as of the last half hour of trading today: JPMorgan Chase & Co. is down -2.63% at $35.88; SAP AG (NYSE: SAP) is up 2.42% at $54.54; and JDA Software Group Inc. (NASDAQ: JDAS) is down nearly -14% at $28.21.

Other standouts from today include the following stocks:

Georgia Gulf Corp. (NYSE: GGC) is up more than 34% at $32.85. The chemical and home products maker has received a buyout offer of about $1.03 billion ($30/share) from Westlake Chemical Corp. (NYSE: WLK).

Metabolix Inc. (NASDAQ: MBLX) is down about -58% at $2.52, after posting a new 52-week low of $2.51 earlier. The bioscience and chemicals company is suffering from the cancellation of a joint venture with Archer Daniels Midland Co. (NYSE: ADM), which the larger company unexpectedly announced this morning.

Patriot Coal Corp. (NYSE: PCX) is down nearly -13% at $7.87. The coal miner lowered its production forecast and closed several operations. We have more coverage here.

Diamond Foods Inc. (NASDAQ: DMND) is down more than -10% at $29.71. The snack food maker is now the subject of a criminal inquiry related to payments it made to farmers.

Canadian Solar Inc. (NASDAQ: CSIQ) is down more than -9% at $3.19. The China-based solar panel maker is among the group of Chinese makers who are cooling off, probably due to profit taking, after several days of sharp share price increases.

US markets are closed on Monday in observance of the birthday of Martin Luther King, Jr. We have the following events for Tuesday:

• 8:30 a.m. – Empire State manufacturing survey
• 11:30 a.m. – 3- and 6-month Treasury bill auctions

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Have a great long weekend.

Paul Ausick

Patriot Coal officials said demand for met coal has weakened in the last few weeks, especially export demand. Demand from China, the world’s largest importer of met coal, is expected to remain weak through the first half of the year, although demand is expected to rise in the second half as Chinese and European economies begin to grow again. Total consumption of met coal could fall by 13 million metric tons in 2012.

In the late morning, Patriot Coal shares are down more than -9% at $8.18 in a 52-week range of $6.92-$29.20.

Shares in Alpha are down nearly -8% at $20.76 in a 52-week range of $15.49-$62.65.

James River shares are down more than -8% at $6.77 in a 52-week range of $5.41-$25.59.

Steel maker Arcelor Mittal is down nearly -2%, while US Steel and AK Steel are both down about -3%.

Paul Ausick

The unofficial closing bells put the DJIA up nearly 489 points to 12,044.55 (4.23%), the NASDAQ rose nearly 105 points (4.17%) to 2,620.34, and the S&P 500 rose 4.33% or nearly 52 points to 1,246.94.

There were several analyst upgrades and downgrades today, including Home Depot Inc. (NYSE: HD) reiterated as ‘buy’ with a $46 price target at Argus. Other ratings actions included Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) reiterated as ‘buy’ with a $94 price target at Canaccord Genuity; Netflix, Inc. (NASDAQ: NFLX) cut to ‘underperform’ at Wedbush; Suntech Power Holdings Co. Ltd. (NYSE: STP) reiterated as ‘hold’ at Argus; Transocean Ltd. (NYSE: RIG) cut to ‘hold’ at Argus; and Calpine Corp. (NYSE: CPN) cut to ‘hold’ at Jefferies. See our story on Transocean’s stock offering and proposed debt offering.

Here are today’s big post-earnings news reactions with prices during the last half-hour of trading: American Eagle Outfitters Inc. (NYSE: AEO) is up 3.3%, at $13.87; The Fresh Market, Inc. (NASDAQ: TFM) is up 5.7%, at $38.73; Jos. A. Banks Clothiers, Inc. (NASDAQ: JOSB) is down -6%, at $48.09; and SeaDrill Ltd. (NYSE: SDRL) is up 6.3%, at $34.82. After markets close today, Aeropostale, Inc. (NYSE: ARO) and Krispy Kreme Doughnuts Inc. (NYSE: KKD) will report earnings.

Several other standouts from today are as follows…

Zoltec Companies, Inc. (NASDAQ: ZOLT) is up 41.5%, at $8.11. The advanced materials maker reported better-than-expected earnings after markets closed yesterday.

Advanced Analogics Technologies, Inc. (NASDAQ: AATI) is up 32.5%, at $5.75. The power management chip maker is being acquired by Skyworks Solutions Inc. (NASDAQ: SWKS) for $258.6 million, or about $6.05/share.

Patriot Coal Corp. (NYSE: PCX) is up 18.7%, at $10.30.  This coal miner, like virtually all its competitors, is down about -40% for the past 12 months. There’s no news to justify today’s price jump, but the company’s thermal coal does sell well in cold weather.

Avalon Rare Metals Inc. (AMEX: AVL) is up 20.3%, at $3.26. The rare earths miner made this big move on no news, but competitor Molycorp Inc. (NYSE: MCP) did a deal with two Japanese companies to manufacture very powerful magnets in Japan for use in wind turbines and other high-tech products.

JA Solar Holdings Co. Ltd. (NASDAQ: JASO) is up 16.6%, at $1.80. The solar PV maker is among several Chinese solar companies moving up today, no doubt as these are considered the most likely to survive a shakeout in the solar manufacturing sector.

Shutterfly, Inc. (NASDAQ: SFLY) is down -12%, at $27.02, after posting a new 52-week low of $26.93 earlier today. The social media company is facing intense competition for its on-line photo products.

Stay tuned for Thursday. Here’s a list of other noteworthy events scheduled for tomorrow(all times Eastern):

• 8:30 a.m. – New unemployment claims
• 9:45 a.m. – Bloomberg consumer comfort index
• 10:00 a.m – Industrial Supply Management manufacturing index
• 10:30 a.m. – EIA natural gas weekly report
• 4:30 p.m. – Federal Reserve balance sheet
• 4:30 p.m. – Money supply report

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Paul Ausick

Met coal currently commands a contract price of about $285/metric ton. The spot price for Australian met coal is around $250/metric ton, a -20% drop in just three months. That indicates that the contract price will fall as well, and probably below the spot price. Platt’s has quoted a broker who has projected prices of $235/metric ton in the first quarter of 2012, falling to $205/metric ton by the end of the year.

The lower pricing is the result of an anticipated slowdown in the global economy, particularly in China which has experienced a construction boom in the past few years. But tighter government restrictions on lending and an over-supply of vacant buildings have resulted in fewer construction projects.

Still, there remains speculation that other coal companies may be takeover targets. We noted a rumor in early September that British miner Anglo American PLC (OTC: AAUKY) may be preparing a bid for Walter Energy. Last week, BHP Billiton plc (NYSE: BHP) was said to be considering a $6 billion offer for Walter Energy, with Brazilian giant Vale SA (NYSE: VALE) also included in the mix.

Like many commodities stocks, Walter Energy’s share price plunge in early August, and posted a 52-week low of $57.62. Shares have recovered to over $75, but that’s still about 50% off the stock’s 52-week high. If a takeover offer is coming, now is probably a good time.

US miner Patriot Coal Corp. (NYSE: PCX) has been boosting its production of met coal, and the company has said it sees strong demand for the steel-making coal continuing from Brazil and India. Patriot’s share price is about 67% below its 52-week high, making it another possible takeover target now that it’s market cap has fallen below $1 billion.

Peabody’s shares were up more than 3% at this morning’s opening, at $39.39, in a 52-week range of $30.60-$73.95. ArcelorMittal’s shares were also up more than 3%, at $18.72, in a 52-week range of $14.77-$38.88. The Market Vectors Coal ETF (NYSE: KOL) is unchanged, at $35.14, in a 52-week range of $27.42-$51.87.

The elephant in the room that no one wants to acknowledge is that if the stronger coal players are using the recent weakness to acquire the weaker players, perhaps these companies are positioning themselves better for the next decade and beyond.  Coal demand is a often considered as a leading indicator because it is still used as a key measurement for power consumption and for building infrastructure equipment and structures.  As with many businesses in and around commodities, getting better scale and better geography can incrementally lower costs and that drives higher margins.   Coal players seem to be positioning themselves for far beyond the next few years.

Paul Ausick

Align Technology, Inc (NASDAQ: ALGN) Started as Neutral with $19 target at Credit Suisse.
Baidu, Inc. (NASDAQ: BIDU) Cut to Buy from Strong Buy at S&P Equity Research (late-Tuesday).
Brocade Communications Systems, Inc. (NASDAQ: BRCD) Cut to Underweight at JPMorgan.
Demand Media, Inc. (NYSE: DMD) Cut to Neutral at Goldman Sachs.
First Solar Inc. (NASDAQ: FSLR) Cut to Sell at Ticonderoga.
Hecla Mining Company (NYSE: HL) named Value stock of the day at Zacks.
hhgregg, Inc. (NYSE: HGG) cut to Underperform as Bear of the Day at Zacks.
InterMune, Inc. (NASDAQ: ITMN) Reiterated Buy with $44 target at Canaccord Genuity.
Limited Brands, Inc. (NYSE: LTD) named Bull of the Day at Zacks.
Minefinders Corp. (NYSE: MFN) named growth stock of the day at Zacks.
Nokia Corporation (NYSE: NOK) Raised to Neutral at Nomura.
Patriot Coal Corporation (NYSE: PCX) Cut to Sell at Goldman Sachs.
Seagate Technology PLC (NASDAQ: STX) Cut to Neutral at JPMorgan.
Vistaprint N.V. (NASDAQ: VPRT) Cut to Sell at Goldman Sachs.

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JON C. OGG

In addition to its struggles with a weak economy, the coal industry is almost continuously fighting rear-guard battles against environmentalists and regulators. The industry, or at least some of its players, have earned the scrutiny following deadly mine explosions and for continuing the widely denounced mining practice known as mountaintop removal. The US Environmental Protection Agency tried to rein in mountaintop removal mining by invoking provisions in the Clean Water Act. In a court ruling yesterday, the industry won a victory over the EPA when the judge ruled that the agency had exceeded its enforcement authority by failing to go through the formal rulemaking process before promulgating the restrictions on mountaintop removal.

The suit was filed by the National Mining Association, an mining industry group that includes large coal miners like Arch Coal Inc. (NYSE: ACI), Alpha Natural Resources Inc. (NYSE: ANR), Peabody Energy Corp. (NYSE: BTU), Cliffs Natural Resources Inc. (NYSE: CLF), Consol Energy Inc. (NYSE: CNX), and Patriot Coal Corp. (NYSE: PCX). The court ruling is expected to remove restrictions on more than 70 mining permits that were holding up projects in Appalachia.

The EPA pointed out that the ruling is a procedural issue and that it does not affect the agency’s authority under the Clean Water Act. In fact, the EPA released in July its final guidance which replaced the interim guidance that the court ruled on yesterday.

This issue still has some time to go before it is finally played out, and coal miners will continue to struggle, but not because they can’t keep knocking the tops off Appalachian mountains. On Monday, Arch Coal revised its outlook for the 2011 fiscal year from EPS of $1.75-$2.15 to $1.00-$1.40. The company has lost production of metallurgical coal at one of its mines following a roof collapse. Several other miners have had similar problems producing the high-priced coal and that is sending mining companies back to Appalachian mines.

Typically, when production of coal is disrupted, the price of coal rises. That’s not happening this time as Australian shipments of coal are fast making up for the disruption to production following last year’s floods. And then there’s the overall weak economy, which cuts demand for energy even more.

Over the past year, all seven of the companies mentioned here have seen share prices drop from around -5% (Consol) to nearly -60% (Alpha). Whether the coal mining stocks are currently a great value or a looming value trap depends more the pace of recovery in the world’s economy than on winning a pyrrhic victory over the EPA. And today’s share price declines bear that out.

Shares of Arch Coal are down more than -2% at around noon today, at $15.44, in a 52-week range of $13.09-$36.99. Alpha’s shares are off -3.5%, at $18.49, in a 52-week range of $15.49-$68.05. Patriot shares are off more than -7.5%, at $9.28, in a 52-week range of $6.92-$29.20. The Market Vectors Coal ETF (NYSE: KOL) is up 0.3%, at $32.03, in a 52-week range of $27.42-$51.87.

Paul Ausick

Alpha Natural Resources has cut its 2011 coal shipment targets down to 102.5 to 109.5 million tons from a prior range of 104 to 112 million tons. Lower metallurgical coal exports to Asia are forcing it to cut production at some of its domestic coal mines.  The company is also reviewing its 2012 estimates as well with global market conditions and it will adjust the 2012 at its next earnings report.

Walter Energy’s lower guidance is due to adverse weather conditions at its Alabama mining site and in its northeast British Columbia site.  Walter now sees earnings of $1.00 to $1.16 EPS for the current quarter and sees $2.63 to $2.95 EPS next quarter.  Thomson Reuters had estimates of $3.23 EPS this quarter and $3.16 EPS next quarter.  Metallurgical coal sales guidance was cut for the second half of 2011 to 5.2 million metric tonnes from a prior target of 5.9 million metric tonnes.

Patriot Coal Corporation (NYSE: PCX), Arch Coal Inc. (NYSE: ACI), and James River Coal Co. (NASDAQ: JRCC) are all getting hit hard: Patriot is down 6.5% at $10.66 and the new 52-week range is $10.35 to $29.20; Arch Coal is down 6.4% at $16.85 and the new 52-week trading range is $16.70 to $36.99; James River is down 5.6% at $8,55 and the new 52-week range is $8.48 to $27.06.  Alpha is down over 7% at $25.07 and the new 52-week range is $23.90 to $68.05 with that low being seen today.  Walter is down over 10% at $66.93 and the new 52-week range is $63.88 to $143.76.

Oddly enough, Yanzhou Coal Mining Co. Ltd. (NYSE: YZC), a steam coal and metallurgical coal player in China, is only down 1.2% at $25.37 and the 52-week trading range is $21.70 to $41.89.

The Market Vectors Coal ETF (NYSE: KOL) is also down ‘only’ 2.4% at $35.88 and its 52-week trading range is $35.73 to $51.87.

Weather is one thing, but a slowing demand out of Asia is another issue.  The world is hoping that growth in Asia can remain high enough that the U.S. and Europe can still avoid a recession or that they can limit the impact of a new recession.  Too much time has passed for there to be a true double-dip recession, but a new poll suggests that 80% of America feels like the recession never even ended.

In copper, a leading indicator, Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX), also suffering from a strike in Indonesia, is down 6.2% at $36.14 and its new 52-week range is $36.12 to $61.35.  It almost seems odd that the iPath DJ-UBS Copper TR Sub-Index ETN (NYSE: JJC) is up 0.6% at $48.38 on the day.

JON C. OGG

Bankrate Inc. (NYSE: RATE) Started as Buy at Citigroup; Started as buy at Stifel Nicolaus; Started as Outperform at RBC.
Buffalo Wild Wings Inc. (NASDAQ: BWLD) Raised to Outperform at Raymond James.
Dollar Financial (NASDAQ: DLLR) Reiterated Buy as Bull of the Day at Zacks.
Dollar Tree, Inc. (NASDAQ: DLTR) Raised to Overweight at Piper Jaffray.
Grupo Televisa S.A. (NYSE: TV) Cut to Underperform as Bear of the Day at Zacks.
Hawaiian Holdings, Inc. (NASDAQ: HA) Raised to Neutral at BofA/ML.
International Game Technology (NYSE: IGT) Reiterated Outperform but raised target to $24 at Credit Suisse.
Juniper Networks, Inc. (NYSE: JNPR) removed from Conviction Buy List at Goldman Sachs; also downgraded at William Blair, Oppenheimer, and Citigroup.
Las Vegas Sands (NYSE: LVS) Reiterated Outperform and raised target to $60 from Credit Suisse.
LinkedIn Corporation (NYSE: LNKD) Started as Market Perform at William Blair.
Melco Crown Entertainment Ltd. (NASDAQ: MPEL) Reiterated Buy and raised target to $19.10 at Citigroup.
National Oilwell Varco (NYSE: NOV) Reiterated Buy and raised target to $100 at Canaccord Genuity.
Patriot Coal Corporation (NYSE: PCX) Removed from Conviction Buy List at Goldman Sachs.
Phillip Morris International Inc. (NYSE: PM) Reiterated Buy and raised target to $80 at Argus.
Sinclair Broadcast Group Inc. (NASDAQ: SBGI) Cut to Neutral at JPMorgan.
Starbucks Corporation (NASDAQ: SBUX) Raised to Buy at Janney Capital.

You are invited to join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

The Top Ten Analyst Calls of the Week were in shares of Biogen Idec Inc. (NASDAQ: BIIB); Boston Scientific Corporation (NYSE: BSX); F5 Networks, Inc. (NASDAQ: FFIV); First Solar, Inc. (NASDAQ: FSLR); FriendFinder Networks Inc. (NASDAQ: FFN); Molycorp, Inc. (NYSE: MCP); Reynolds American Inc. (NYSE: RAI); SatCon Technology Corporation (NASDAQ: SATC); and SIRIUS XM Radio Inc. (NASDAQ: SIRI).  There was also a standout coal sector call, with a particular highlight in Patriot Coal Corporation (NYSE: PCX).

We have shown some added detail on the summaries, included price impact and target data ahead, and included additional color if applicable. If the calls were much more detailed or broader we also included a link to more data.

Biogen Idec Inc. (NASDAQ: BIIB) is a strange situation.  We asked on Monday if it was getting too expensive based upon valuation after ISI Group raised its rating to BUY from HOLD on Monday, but shares rose almost 10% for the week to $103.42.  The stock actually rose every day this week and it received multiple analyst upgrades: Raised to Hold from Sell at S&P Equity Research; Raised to Outperform from Neutral at Credit Suisse; Raised to Buy from Hold at Deutsche Bank.  If it is too expensive, analysts believe it can get much more expensive now.

Boston Scientific Corporation (NYSE: BSX) is supposed to be a winner from J&J’s stent exit but this company remains in perpetual turnaround mode.  Moody’s lifted its corporate credit rating to positive, implying that its “Ba1″ rating could be moved to Baa3 or better and that would make it investment grade again.  We had a duel between two equity analysts this week:

• UBS cut its rating to Neutral from Buy with a $7.65 target;
• Stifel Nicolaus started coverage with a Buy rating and a $9.00 price target.

Shares of Boston Scientific closed up almost 2% at $6.89 for the week but that was after a 2.8% drop on Friday after the UBS cut and with a weak market.

F5 Networks, Inc. (NASDAQ: FFIV) has been a controversial stock since its meteoric rise came tumbling down.  This week brought an analyst duel with a key upgrade and a key downgrade: JPMorgan cut its rating to Neutral with a $105 price target while Barclays raised its rating to Overweight with a $125 price target.  The stock closed up about 10% at $106.10 on the week and is still down considerably from its $145.76 high.

First Solar, Inc. (NASDAQ: FSLR) had a rough week closing at $116.56 versus $121.55 the Friday before.  Morningstar included it in a sector downgrade with a call for more solar weakness ahead.  Lower oil prices did not help.  JPMorgan also cut estimates and its target to $105 and a company called Maxim Group issued a sell rating.  Meanwhile, TheStreet gave a competing list of value stocks in solar with much more upside.