Massey Energy Guides Lower, Shares Take Hit

Dahlman Rose recently reported Massey Energy MEE is guiding 2H2010 operational performance to be at the low end of it's guidance range, joining several peers in recent weeks in citing the increased regulatory impact of MSHA activities in 3Q. Despite negative near-term factors, management highlighted several upcoming productivity improvement drivers. Massey joins other industry leaders in reducing sales expectatiosn for 2H2010 over the past several weeks. Though not all of the producers have directly cited increased regulatory activity as being responsible for the shortfall, the activity is likely at least partly to blame. Dahlman Rose rates Massey Energy a Buy because of its exposure to high-margin metallurgical coal as well as thermal coal in Appalachia. The growing production and high margins of Massey outweigh near-term litigation risk. Negative risks to Massey include geologic and/or related problems at its operations, its concentration of assets in Central Appalachia, as well as litigation risk stemming from the accident at the Upper Big Branch mine. Massey shares have taken a hit today and are trading down almost 7% Get free trades at tradeMONSTER!