The Zacks Analyst Blog Highlights: Alpha Natural Resources, Patriot Coal, CSX, Norfolk Southern & Union Pacific - Press Release
January 17 2012 - 3:30AM
Zacks
For Immediate Release
Chicago, IL – January 17, 2012 – Zacks.com announces the list of
stocks featured in the Analyst Blog. Every day the Zacks Equity
Research analysts discuss the latest news and events impacting
stocks and the financial markets. Stocks recently featured in the
blog include Alpha Natural
Resources (ANR), Patriot Coal
(PCX), CSX Corporation (CSX),
Norfolk Southern (NSC) and
Union Pacific (UNP).
Get the most recent insight from Zacks Equity Research with the
free Profit from the Pros newsletter:
http://at.zacks.com/?id=5513
Here are highlights from Monday’s Analyst
Blog:
Coal Worries Railroads Again
The coal projection has once again stirred up trouble for the
railroads. After being hit by lower coal shipment by producers
Alpha Natural Resources (ANR), among others, in
the second half of the fiscal 2011, rail stocks plunged on the news
of another player in U.S. coal biz, Patriot Coal
(PCX) closing a few of its operation due to the softening of coal
demand.
The ensuing negative market reaction resulted in declines in
share prices on Friday. Major players like CSX
Corporation (CSX) and Norfolk Southern
(NSC) fell 3.3% and 2.2%, respectively, followed
by Union Pacific (UNP) which dropped
1.2%.
Over the past year, rail companies have shown significant growth
in terms of their coal shipments that represents approximately
one-third of their total freight businesses. The declines in
Australian markets last year, after the floods tempered mining
activities, resulted in substantial momentum in the U.S. coal
market. Additionally, increasing coal demand from Asian countries
like China and India for steel manufacturing also uplifted the
position of the U.S. as global coal supplier. As a result,
railroads were optimistic on the long-term demand for coal given
the emerging position of U.S. as the coal export hub.
However, the current global volatility that affected mining
activities, the sudden drop in demand from the Asian markets
sighting problems over quality along with harsh weather conditions
in the Pacific region have resulted in a major setback for coal
shipments across the globe. Additionally, the recovery of the
Australian mine from last year’s flood also poses a threat to the
U.S. coal exports. On the domestic front, lower natural gas prices
and seasonality impacts have also dampened coal demand and the
trend is expected to continue in the near term.
We are yet to see changes in predictions by railroads like CSX
and Norfolk in the upcoming quarterly and full year 2011 results.
Both companies still stick to their investment plans and export
projections. In fact, for the full year, CSX has raised its capital
plan from $2 billion to $2.2 billion and Norfolk has set a higher
export goal based on an approximately 5% increase in global steel
production.
What lies ahead for the railroad companies in the backdrop of a
fluctuating economy and raised expectations, is to be watched out
for. Further, several legal battles on railroad safety will also
pose near-term concerns for an industry that has started to rebound
on growing demand for rail freight services.
We are currently maintaining a long-term Neutral recommendation
on Norfolk, CSX Corp. and Union Pacific with a Zacks short-term
(1-3 months) #3 (Hold) rating on Norfolk and CSX. Union Pacific
retains a short-term Zacks #2 (Buy) rating.
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ALPHA NATRL RES (ANR): Free Stock Analysis Report
CSX CORP (CSX): Free Stock Analysis Report
NORFOLK SOUTHRN (NSC): Free Stock Analysis Report
PATRIOT COAL CP (PCX): Free Stock Analysis Report
UNION PAC CORP (UNP): Free Stock Analysis Report
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