NEW YORK (
was the best-performing stock in the
The S&P 500 was rising 15 points, or 1.13%, to 1,332.
Shares of Peabody Energy rose 5%, or $1.20, to $25.08. The stock was upgraded to buy from neutral by Goldman Sachs analysts on Monday with a price target of $37.
"We raise BTU to Buy for three reasons: (1) Improving China macro data and Newcastle thermal prices should drive greater Street credit for BTU's Australia business (better growth profile than covered US peers). (2) BTU is exposed to our view that PRB-levered stocks should see improved relative performance as PRB prices continue to rise from below cash costs today to mid-cycle by the end of 1H2013. (3) Its valuation given a 9% 3-year EBITDA CAGR screens favorably vs. the coverage group. Also, discussion of China thermal and Mongolia met coal JVs remain potential long-term catalysts," the analysts wrote in a report on Monday.
Peabody Energy trades at an estimated price-to-earnings ratio for next year of 6.89 times; the average for coal companies is 18.47. For comparison,
has a higher forward P/E of 12.71.
Twenty-six of the 30 analysts who cover Peabody Energy rated it buy. Three analysts gave the stock a hold rating and one rated it sell.
The stock has fallen 24.37% year to date.
-- Written by Alexandra Zendrian
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