Boston, MA 04/10/2014 (wallstreetpr) – Alpha Natural Resources Inc. (NYSE:ANR) had a sharp fall this week as Goldman Sachs Group Inc. had cut Alpha’s rating to sell. The reason to cut the rating is the expectation of further lower prices for the commodity. Goldman changed the rating to sell from its previous rating of hold on Alpha. The initial price target of $6 is cut down to the price target of $4. At the same time Goldman has maintained hold rating on Walter Energy Inc. but has changed the price target to $10 from $12.
Reason for fall
The fall was also seen in the entire sector. The reason of fall is the lower price estimate of commodity. Goldman has also reduced the estimated metallurgical coal price from $150 to $141 for the current year. The future projections for year 2015 and year 2016 are also lowered along with the current year. The company is expecting a declined growth of Chinese imports. Also the supply is expected to surpass the demand. In fact the oversupply level can increase considerably in the coming years.
The silver lining
Goldman report came at a time when Alpha Natural Resources Inc. (NYSE:ANR)’s stock prices were doing well. The stock price had a good move in last few weeks. Many of the market players were positive on the stock. Even some of the companies expect good demand for thermal coal primarily used for electricity production. At one side where the demand for thermal coal is expected to rise on the other hand the metallurgical coal outlook is looking dim in the coming years.
Mixed Outlook
As for now it is a mixed outlook on Alpha Natural Resources Inc. (NYSE:ANR) as the demand scenario for thermal coal and metallurgical coal is varying. The outlook for Metallurgical coal can change if there is substantial improvement in performance in China.
