J.P. Morgan Initiates Coverage On Alpha Natural Resources

J.P. Morgan Chase & Co. is out with a research report on Alpha Natural Resources (NYSE:

) and is initiating coverage with a Neutral rating and a $39 price target on shares. In a note to clients, J.P. Morgan Chase & Co. writes, "We are initiating coverage of Alpha Natural (

ANR

) with a Neutral rating and $39 Dec 2011 price target after it completed the purchase of Massey Energy (

MEE

), which we previously covered. We believe this acquisition creates the leading Central Appalachia (CAPP) coking-coal-heavy coal equity. The new company combines what we view as Alpha's strong management team with Massey's (best in region) coal reserve base. While the new company expects around $240m of synergies (about 4% of costs), with costs rising and coking coal prices potentially peaked, we believe Alpha and the other CAPP miner's margins are likely to be under pressure, so we wait to see synergies materialize." Shares of ANR gained $1.64 yesterday to close at $34.91, a gain of 4.93%.

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