Tuesday, November 2, 2010

Alliance Resource (Nasdaq:ARLP) Should Rebound in 2011

Alliance Resource Partners (Nasdaq:ARLP) should enjoy a rebound in 2011 says Barclays (NYSE:BCS), who raised the price target on the coal miner while maintaining their "Equalweight" rating on the company.

Barclays said, "Alliance Resource Partners reported 3Q10 earnings per unit of $1.48 vs. the consensus estimate of $1.69/unit and our estimate of $1.67/unit. The miss was driven in part by lower than expected coal volumes in Northern and Central Appalachia due to the heightened regulatory environment together with higher operating costs due to the ongoing ramp up of the River View mine...Our new $62 target price assumes a 6.5% yield on our 2012 distribution estimate of $4.00 per unit. Our prior price target of $55/unit assumed a 7.3% yield on our 2012 distribution estimate of $4.00 per unit."

Barclays did lower their earnings per share estimate on Alliance from $6.90 to $6.70 a share, but increased it significantly for full year 2011 from $5.70 to 6.75.

Alliance closed Monday at $59.45, gaining $0.61, or 1.04 percent. Barclays increased their price target on the company from $55 to $62.

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