UBS (NYSE:UBS) FBR Capital, KeyBanc all maintained their ratings on Walter Energy (NYSE:WLT), although they did lower their price targets on the company.
UBS maintained their "Buy" rating on Walter, while lowering their price target from $112 to $111.
UBS analyst Shneur Z. Gershuni, said, "We expect WLT will likely trade lower on the news (lowered production guidance); however, we would view any weakness as a buying opportunity...Additionally, despite the lost earnings we expect WLT to generate 900mm of FCF over the next two years and expect share repurchases to continue."
They consider the weak price an opportunity to buy.
FBR Capital reiterated their 'Outperform' Rating, while lowering their outlook for the fourth quarter of 2010. They also lowered the price target from $88 to $87.
FBR said, "...we are lowering our 2010 EPS/EBITDA estimates by about 9% and our price target by $1.00, primarily to reflect the lowered volume and increased cost guidance announced by the company yesterday evening, partially offset by a higher-than-expected 4Q10 met coal settlement. The issue surrounds starting up the new longwall panel, which traditionally could be an issue for any underground company. Regarding those with a short-term time horizon, we would suspect that some will take profits..."
KeyBanc also reiterated their "Buy" rating on the energy company, while adjusting the earnings per share at Mine No. 4 Setback.
"We are reiterating our rating on shares of WLT, but lowering our 2010 and 2011 EPS estimates following the Company's business update issued after the market close. Our 2010 EPS estimate goes to $8.25 (from $9.30), while our 2011 estimate moves to $11.00 (from $12.25)...Our new 2010 estimate now reflects lower shipments and operating profit per ton in light of production difficulties WLT has encountered at Mine No. 4, which are expected to impact 3Q production costs at the mine and have the delayed effect of reducing 4Q shipment levels," said the KeyBanc analyst.
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