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Most Analysts Recommend ‘Hold’ for Cloud Peak Energy

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Analyst ratings

According to recent data compiled by Thomson Reuters, of the nine analysts covering Cloud Peak Energy (CLD), two (or 22.0%) gave the company a “buy” or “strong buy” rating, and seven (or 78.0%) gave it a “hold” rating. There were no “sell” or “strong sell” recommendations.

There have been no revisions in ratings after the release of Cloud Peak Energy’s 1Q17 results. As of July 12, 2017, Cloud Peak’s consensus 12-month target price was $4.77, which reflects an upside potential of ~26.5% based on its market price of $3.77.

The median target price for CLD from these recommendations is $4, which is lower than the mean target price. Cloud Peak’s median target price has fallen from $5.50 to $4, and its mean target price has fallen from $5.53 to $4.77 since April 13, 2017.

The target prices and return potentials of other major coal (KOL) mining companies are as follows:

  • Westmoreland Coal (WLB) – target price of $11.50, which represents an upside potential of 169.3%
  • Alliance Resource Partners (ARLP) – target price of $27.17, which represents an upside potential of 34.2%
  • Peabody Energy (BTU) – target price of $32.57, which represents an upside potential of 20.9%

It’s important to pay attention to analysts’ recommendations. If popular Wall Street analysts change their views on a stock, a significant short-term movement in the stock could occur.

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Consensus estimates

Analysts expect Cloud Peak Energy’s (CLD) 2Q17 earnings to be muted compared to 2Q16’s. They anticipate the company to report adjusted EPS (earnings per share) of -$0.04 in 2Q17, compared with $0.48 in 2Q16. Cloud Peak reported adjusted EPS of -$0.26 in 1Q17.

However, it’s important to note that Cloud Peak’s higher 2Q16 EPS were mainly due to one-time non-cash accounting income of $37.3 million. That income was recognized due to the re-measurement of the company’s asset retirement obligations in 2Q16.

Notable ratings 

Jefferies started coverage on Cloud Peak Energy stock on March 7, 2017, giving the stock a price target of $5 and a “hold” rating. JPMorgan Chase upgraded its rating for Cloud Peak stock from “neutral” to “overweight” on January 30, 2017, with a $7 price target. In the next part of this series, we’ll analyze analysts’ expectations and find out whether these recommendations are conservative or optimistic.

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