Patriot Coal Slides Again After Goldman Downgrade (PCX, AHGP, ARLP, BTU, CNX, ACI, ANR, CLD)

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Coal is a key fossil fuel for use in electricity generation

• Peabody CEO Bullish On Coal, Cramer Likes The Stock (BTU, MT, ACI, ANR, WLT, JRCC, NRP)
• Shareholder Urges Walter Energy Sale; Citi Loves Coal Stocks (WLT, BTU, MT, ACI, NRP, AHGP, ANR, CNX, JRCC, CLD)
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Avg. Market Cap:	$1.8B
Avg. P/E Ratio:	11.0
Avg. Div Yield:	2.5%

Shares of coal miner Patriot Coal (PCX) are plunging 6% after Goldman Sachs downgraded the stock to “neutral” from “conviction buy” and pared its price target on the stock to $24 from $29, citing reduced free cash flow estimates and higher than expected costs. The news is weighing on the Coal Stocks Index, which is down 1.4%.

On Tuesday, Missouri-based Patriot reported its twelfth consecutive quarterly loss, citing higher production costs associated with metallurgical coal output. Metallurgical coal is the coal grade that is in high demand by Asian steelmakers and its price has been soaring over the past year, averaging $315 per ton in the second quarter, according to Reuters.

Patriot brought three new metallurgical coal mines online in the quarter, pressuring costs, but noted higher average selling prices in the third quarter will help it narrow its loss for the period. Still, the stock has tumbled 19% in the past week.

The Index has been under pressure over the past week, sliding 2% and just two constituents, Alliance Holdings (AHGP) and Alliance Resource Partner (ARLP) are up today. Peabody Energy (BTU) and Consol Energy (CNX), the two largest U.S. coal producers by market value, are fractionally lower. Arch Coal (ACI) is down 3% while Alpha Natural Resources (ANR) and Cloud Peak Energy (CLD) are both lower by 2%.

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Tags: ACI, AHGP, ANR, ARLP, BTU, CLD, CNX, PCX