Goldman Sachs Comments On Walter Energy Management Meeting

According to Goldman Sachs, Walter Energy WLT held a management meeting. Goldman Sachs reported that it met WLT management in New York on April 5 as part of a company presentation to sell-side analysts. “Key takeaways follow. (1) A challenging 1Q11 should be the trough for Alabama production. The expansion of the acquired Canadian mines appears to be on track, with potential additional growth from exploration as well. (2) We were impressed with Walter management and believe Street comfort with the new team can be a positive catalyst. (3) Management plans to pay down debt but remain opportunistic if attractive acquisition opportunities arise. (4) We expect updated guidance on the 1Q call (limited changes) and a strategy-focused analyst meeting following management and board meetings in May. WLT trades at 5.6X two-year rolling forward EV/EBITDA vs. 5.9X for coverage. Our price target assumes a 6.4X target multiple (5.7X prior) vs. 5.3X for ANR, 5.7X for ACI, and 7.2X for CNX and BTU. We assume a premium to met peers and ACI due to stronger returns/volume/EBITDA growth but a discount BTU and CNX as they have better long-term growth visibility/upside and diversification.” Walter Energy closed yesterday at $140.76.