Why Walter Energy (WLT) Is Bouncing Back Today

NEW YORK (TheStreet) -- Walter Energy (WLT) was gaining 6.7% to $7.76 Friday after Morgan Stanley analyst explained how the miner's new debt can buy it more time.

Morgan Stanley analyst Evan Kurtz said that Walter Engery's new debt offering gives the company enough liquidity to make it through 2017 even if met coal prices don't recover.

"The met coal market continues to defy cost support justifications for higher pricing (we currently believe spot prices are below cash costs of 89% of global seaborne producers)," Kurtz wrote. "While not sustainable in our view, we have altered our bear case view to reflect a world where prices never rise above $160/t again, even though we see 2017 marginal production cost of $180/t. In this case, our bear case valuation is $2."

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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 several weaknesses, 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 unimpressive growth in net income, poor profit margins, generally disappointing historical performance in the stock itself and generally high debt management risk."

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