Why Peabody Energy Stock Tumbled on Thursday
Key Points
She lowered her price target on it by $4 per share.
Despite that, she held fast to her equivalent of a buy recommendation.
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An analyst's price target cut was only the latest headwind buffeting coal miner Peabody Energy's (NYSE: BTU) stock. On Thursday, Peabody's shares fell by almost 9% as investors grew impatient waiting for positive news from or about the company.
A first-quarter outlier?
That reduction, from BMO Capital's Katja Janic, was part of a broader analysis of how the first quarter might have played out for mining and metallurgical stocks. In the report, Janic lowered her Peabody price target to $40 per share from $44, while maintaining her outperform (read: buy) recommendation.
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According to reports, the pundit believes that most of the stocks under her firm's coverage will post higher earnings in the quarter. This will be due to a general rise in underlying commodity prices.
There's a caveat with Peabody, however. The company's stock got socked at the end of March when it revealed in a regulatory filing that first-quarter sales volume from its Centurion mine in Australia would likely be around 250,000 tons, well below the originally anticipated projection.
The heavy weight of tradition
Coal and other traditional energy sources had been somewhat in vogue, thanks in no small part to the Trump administration's desire to boost these industries. However, I don't think this can last, as greener energy generation solutions have proven not only to be viable, but also popular because of their light impact on the environment.
Mainly for that reason, I'd give Peabody and the rest of the coal industry a pass.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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