We are maintaining our Buy recommendation on CONSOL Energy Inc. (CNX). The pullback in the coal space has been overdone and does not accurately reflect global fundamentals. The supply and demand picture is still very favorable as physical prices for both metallurgical and thermal coal have remained elevated while other commodities have slid sharply.
CONSOL Energy will be able to leverage its unpriced production, high Btu [British thermal units] reserves and proximity to international markets to grow its margins and earnings. The current financial turmoil effecting main street will not be a problem for CNX as it has a solid balance sheet and strong cash flow generating abilities that will cover its capital budget in 2009.
We combined the equity from the coal operations with 81.7% of CXG equity to get the total equity value of CONSOL. Dividing by diluted shares outstanding we arrive at our twelve month target price of $84.00 per share. We are maintaining our Buy recommendation on CONSOL Energy but decreasing our target price from $107.00 to $84.00 per share.
Read the full analyst report on CNX.
Get real-time market insights and profitable stock recommendations from the team of analysts at Zacks Equity Research. See all todays Analyst Blog entries on Zacks.com.