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.
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