Coal shares down on lowered price targets
(Reuters) - Shares in coal companies fell on Friday after Dahlman Rose & Co cut the miners' stock price targets on concerns over lower coal prices, weak demand and higher costs.
In afternoon trading on the New York Stock Exchange, declines ranged from 5.6 percent for Arch Coal (ACI.N) to 2.5 percent for Cliffs Natural Resources (CLF.N). The Dow Jones coal index .DJUSCL was down 3.23 percent.
In a research note, Dahlman Rose analyst Daniel Scott lowered his price targets for Arch, Alpha Natural Resources (ANR.N), Peabody Energy (BTU.N) and Consol Energy (CNX.N), citing lower prices, especially for thermal coal sold to utilities by companies operating in Central Appalachian fields.
FBR also cut its price targets for Peabody, Arch and Consol.
Peabody shares fell 3.5 percent, Consol was off 2.8 percent and Alpha lost 2.9 percent.
Thermal coal prices have slumped as natural gas prices have hit historic lows; low gas prices make it economical for coal-fired power plants to switch to gas.
"This earnings season will be marked by widespread sales-guidance lowering and cost pressures, as ... sales come under pressure from weak gas prices, weak demand and mild weather," Scott wrote.
But he said he was encouraged by signs that global seaborne exports of steel-making metallurgical coal may be firming.
On Thursday U.S. coal mining shares rose on hopes the companies would benefit from pricing and export opportunities following the closure of a mine in Australia that shipped steel-making coal to Asian markets.
(Reporting By Steve James; editing by John Wallace)
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