Wells Fargo Downgrades Walter Energy (WLT)

NEW YORK (TheStreet) -- Wells Fargo downgraded Walter Energy (WLT) to "market perform" from "outperform" Friday.

Shares of Walter Energy fell 5.5% to $11.81.

The firm lowered its valuation range for the energy company to between $10 and $13 from a previous range of $18 to $20.

Analyst Sam Dubinksy wrote, "We originally were expecting met coal pricing to recover in tandem with Chinese steel production in 2013. This did not occur (China grew output over 8%, but pricing fell due to supply additions at low cost miners and FX) and with China potentially slowing again due to tightening credit, we believe pricing will remain a challenge in 2014. Given Walter's high debt loads and earnings likely to remain very weak, we are more cautious on shares."

Wells Fargo lowered its 2014 EPS for Walter Energy to a net loss of $2.56 a share from $1.03 a share.

TheStreet Ratings team rates WALTER ENERGY INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate WALTER ENERGY INC (WLT) 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 poor profit margins, weak operating cash flow, generally disappointing historical performance in the stock itself and generally high debt management risk."

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