Monday, November 1, 2010

TECO Energy (NYSE:TE) Share Price Should Rise on Met Coal Market

FBR Capital raised their price target on TECO Energy, Inc. (NYSE:TE), citing an improved metallurgical coal market.

"Following a review of the quarter, we are raising our price target for TE to reflect an improvement in the met coal market and the benefit of cash proceeds from the DECA II sale. However, as TE stock trades near or above $18/share, we believe that it increasingly reflects an acquisition premium for TE Coal. We support this view with a detailed analysis enclosed performed in collaboration with the FBR Coal Team. Our base case valuation for TECO Coal reflects an $820 million enterprise value that incorporates strong upward momentum in pricing, offset by cost escalation. TE stock looks fairly valued to us but becomes stretched as it reaches our price target using current market multiples," FBR said.

FBR said they're maintaining their "Market Perform" rating on TECO, while raising the price target from $17 to $18 a share. TECO closed on Friday at $17.59, gaining $0.26, or 1.50 percent.

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