Walter Energy: Avoid on Debt Concerns
With Bank of America issuing a negative report on metallurgical coal, Walter Energy (NYSE: WLT ) slumped 20% on the news. The analyst was also bearish on other met coal producers including Alpha Natural Resources (NYSE: ANR ) and Arch Coal (NYSE: ACI ) . Typically a beaten down stock would grab some interest in the market, but in the case of Walter Energy, recent debt financings and weak prices for met coal make it questionable whether the stock will rebound.
Walter Energy is the largest pure play, met coal miner in North America with operations primarily in Alabama and Canada. The stock was a poster child for the booming commodity sector back in 2011 when it soared to over $140 on relentless demand from China. Now, the stock has a prominent firm placing a $2 target on the stock.
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