Friday, KeyBanc Capital initiated coverage of Walter Energy, Inc. (WLT) stock with a Buy rating and a price target of $73.
Analyst Mark Parr noted that WLT has recently transformed into a "pure play" metallurgical coal and energy company with long-term strategic advantages, including a conservative capital structure/excellent free cash flow metrics, 20-year permitted reserves of exceptional quality coal, shipping advantages into Europe and South America and new capacity to access growth opportunities in 2010-2012.
The analyst believes WLT also offers above average potential for multiple expansion over the next several years vs. its historic median level of 8.1x EV/forward EBITDA as investors gain familiarity with the company's pure play status, WLT executes on its marketing and export growth strategy, and high quality met coal becomes increasingly scarce on a global basis.
Currently, WLT is down $0.79 or 1.29% and trading at $60.65.
For comments and feedback: editorial@rttnews.com