Thursday, May 08, 2008

Peabody (NYSE:BTU): Morgan Stanley ups tgt to $80 from $54

Morgan Stanley is out with a positive call on Peabody (NYSE:BTU) raising their tgt significantly from $54 to $80. According to the firm the co is increasingly a play on execution of a growth story in Australia. BTU has underperformed peers largely due to disappointing results in its Australian segment. MSCO thinks results will improve as coal chain expansions should allow Peabody to grow production, ease cost pressures, and improve its mix of high-margin metallurgical coal.

The firm thinks BTU can reach +30 mm tonne production sooner than expected, and on minimal investment. They expect improved pricing and volume, mostly in Australia, to result in EBITDA tripling from 2007 to 2009.

Reits Overweight.

Notablecalls: This is a pretty powerful call, ladies and gentlemen. Peabody has lagged peers recently due in large part to the performance of its Australian operations. Now Morgan Stanley says things are about to get better there & that the stock will catch up with peers.

This call is worth 1-3 pts of upside in the stock.

1 comment:

cramermutebutton said...

interesting. this one was worth $3 points on the upside in 2 days... yet no mention by the monday morning quarterbacking crew.

Perhaps it was too high priced for them.