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Seaport initiates coverage of CONSOL Energy with 'buy' rating, $32 price target

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Seaport initiates coverage of CONSOL Energy with 'buy' rating, $32 price target

Seaport Global Securities LLC initiated a buy rating on CONSOL Energy Inc., with a price target of $32, after it officially separated from CNX Resources Corp.'s shale gas business to focus on the production of thermal and crossover metallurgical coals from its Pennsylvania mining complex.

"The company, which is based outside of Pittsburgh, boasts some of the highest-quality, most cost-efficient utility coal assets in the U.S.," Seaport said in a Nov. 30 research note, and has unparalleled access to the export markets through its ownership of the CNX Marine Terminal in Baltimore and the terminal's relative proximity to its mines.

Its top 15 utility customers include blue-chip companies such as Duke Energy Corp., Dominion Energy Inc. and Southern Co.

Key potential drivers of the company's stock performance would be the Department of Energy's grid reliability proposal, natural gas prices above $3.50/MMBtu, European utility coal prices remaining at near or above $90 per tonne and an accretive corporate simplification strategy, Seaport said.

Seaport projects the company will generate EBITDA of $370 million in 2018 and $343 million in 2019, while free cash flow is forecast to reach $146 million and $125 million in 2018 and 2019, respectively.

CONSOL Energy began trading Nov. 29 on the NYSE under the ticker symbol CEIX, while CNX Resources retained the company's ticker symbol, CNX.