Jefferies Reiterates Buy Rating on Alpha Natural Resources (ANR)

Jefferies & Company is out with a research report this morning, where it reiterates its Buy rating on Alpha Natural Resources ANR; it has a $62.00 price target on the stock. The Jefferies analysts noted that they expect ANR's product mix to leverage recovering thermal and strong global met coal markets, support margins, and drive cash flow generation. At a recent analyst meeting, company management provided a thorough and supportive overview on key issues, especially growth initiatives, risk management, M&A opportunities, balance sheet flexibility and strength while stressing the market's current mis-pricing of its shares, which led the analysts to continue recommending investors add to positions. As for valuation, the analysts remarked, “Alpha's valuation should reflect its diversified business model and strong metallurgical coal capabilities. Our $62 PT reflects an EV/EBITDA of 6.3x our 2011 forecasted EBITDA of $1.25B, valuation within historical range. The major risks reflect a softening of global coal supply demand fundamentals, geological and regulatory disruptions, and a reversal in met coal volume and price expectations.”