Dahlman Rose Sees 26% Upside In Arch Coal (ACI)

Dahlman Rose & Co. has a Buy rating and a $43 price target on shares of Arch Coal ACI after it raised guidance. In a note to investors, Dahlman Rose writes, "Arch has modestly increased 2011 financial guidance due to higher anticipated PCI (pulverized coal injection) sales. EBITDA is now guided at $930-1,050, up from $910-1,030 previously, while total sales into metallurgical markets is expected to be 7.5MM tons, up from 7.0MM. First quarter adjusted EBITDA was $191MM versus our forecast and consensus of $202MM and $192MM, respectively. Variance from our estimate can be attributed weaker tonnage and price realizations in the Powder River Basin, offset by lower costs in the Western Bituminous region. Arch ran PRB operations at a reduced level in 1Q ahead of what management expects to be a stronger regional market in 2H11." Shares of ACI are down 69 cents to $33.32, a loss of 2% this morning.