Dahlman Rose Comments On Peabody Energy Following In-Line Earnings

Peabody's BTU 4Q10 earnings were roughly in line with expectations, feeling the impact of Queensland flooding. Australia output in 2011 is expected to be much better than anticipated, particularly on the met side. Peabody provided details on the status of and expected output from its Queensland operations as well as 1Q11 financial guidance. Adjusted 4Q10 EBITDA came in at $446MM versus our $453MM forecast, putting full-year EBITDA of $1,814MM roughly in line with revised company expectations as of early January. For 1Q11, Peabody now expects EBITDA of $325-425MM. The operational status of several of the company's Queensland mines, particularly on the metallurgical side, bodes well for Peabody as other operators in the region feel more severe impacts from the floods. Dahlman looks for the company to benefit from increased met and thermal seaborne pricing as most of the 2-4Q11 tonnage remains uncontracted. Dahlman is introducing 2011 quarterly earnings estimates and adjusting the price target to $80 and reiterate its Buy rating. BTU is trading higher at $62.59