CONSOL Energy Inc. (NYSE: CNX) is one of the top players in the battered and out of favor coal sector. With politics working against coal and environmental regulation perpetually on the rise, it would seem that everyone is against anything to do with coal. After CONSOL’s mid-quarter operation guidance we have both BofA Merrill Lynch and Sterne Agee come out with very positive comments and implying significant upside for CONSOL shareholders. BofA Merrill Lynch as a Buy rating and a $36 price target, while Sterne Agee has a Buy rating and a whopping $60 price target.
Some of the Merrill Lynch estimates were raised, as was the commentary. The firm said, “Today’s news cements our confidence that CNX’s gas business will eventually become cash flow self-sufficient. It remains our top pick within coals given its growing gas/liquids production, low-cost NAPP thermal ops, and minimal met coal exposure.”
The Merrill Lynch team said that the operational update included better than expected 2014 gas production guidance. It maintained estimates of $0.18 in earnings per share versus a consensus of $0.16 EPS, and 2013 earnings are expected to be $0.90 versus consensus of $0.86. The larger hike come in 2014, where earnings were raised to $2.00 per share from $1.90. Total coal production looks better based upon met-coal volumes coming in higher than expected as volume was likely pulled forward.
Sterne Agee said that second quarter thermal and met coal production and sales were slightly above expectations, while 2013 coal production and 2013 to 2014 gas production guidance was in line with its expectations. Sterne Agee’s main point was that the drilling progress is good and shares remain underpriced with a solid asset value in an uncertain energy pricing environment.
We would note that the $60 price target applied by Sterna Agee is the street-high analyst target price. That being said, the consensus price target is $42.17 as of now.
CONSOL shares are up 1.15% at $27.99 against a 52-week trading range of $26.25 to $37.39.
Last week we saw another huge upside call in the coal sector as well, but that was in a rival stock.
Get Ready To Retire (Sponsored)
Start by taking a quick retirement quiz from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes, or less.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Get started right here.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
