Hold Peabody Post-Earnings

We are reiterating our Hold recommendation and target price Peabody Energy (BTU - Analyst Report) after reporting better-than-expected earnings from continuing operations of $1.11 per share. The current economic downturn led by the global financial crisis has made the future uncertain.

We believe that BTU will trade are current levels as there is no immediate catalyst to raise its share price. As emerging Asia economies will likely lead the global recovery in late '09, this should give upward momentum to BTU.

We maintain our positive long-term view of the coal space and see Peabody as the premium player in its industry. If this does happen, we believe Peabody could trade at $53.00 per share by the end of 2009. This is based on our revised estimated 2010 earnings and EBITDA figures of $5.26 per share and $2,500 MM. Our current target is $25.00 per share.

Read the full analyst report on BTU