The St. Louis-based coal producer announced on Monday that it was in talks with creditors over restructuring the company's debt.
"Despite improved Q3 results, Arch's overall financial profile appears headed for a likely restructuring that will further negatively impact current equity valuation," Sterne Agee said. "Current and expected pricing for the company's metallurgical and thermal coal shipments have been pressured by current oversupply of coal, which has generated additional margin uncertainty."
Additionally, Arch Coal reported its 2015 third quarter earnings results before the market open yesterday, which beat analysts' expectations.
Arch Coal reported a loss of $3.38 per share on revenue of $688.5 million. Analysts surveyed at Zacks Investment Research were expecting the company to report a wider loss of $5.79 per share on revenue of $688.29 million.
Shares of Arch Coal were down 3.23% to $1.50 in early morning trading on Tuesday.
Separately, TheStreet Ratings team rates ARCH COAL INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
We rate ARCH COAL INC (ACI) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins, weak operating cash flow, generally disappointing historical performance in the stock itself and generally high debt management risk.
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.