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CNX's larger share of Pa. mines boosts price target, says analyst

CNX CoalResources LP's recent acquisition of a larger share of thePennsylvania Mine Complex from its parent company helped boost thepartnership's price target ahead of quarterly earnings, according to analysts

"We have increased our price target from $15 to $18 perunit based on CNXC's improved coverage and 12.5% yield," said an Oct. 4company note by Jefferies LLC. The analysts maintained their hold rating forCNX.

CNX recently announced that it was acquiring 5% more of the PennsylvaniaMine Complex from Consol for $88.8 million, bringing CNX's total ownership ofthe complex up to 25%.

"We estimate that CNXC's available annual distributablecash flow per unit over the next five years will increase by 5% on average as aresult of this transaction," the note said.

Analyst Christopher LaFemina and associates said CNX isincreasing its coal exposure since the seaborne markets have improved.

"CNXC management has seen recent evidence of a recoveryin the US coal markets. While the company has limited near-term exposure toexport markets, this exposure will increase over time as existing contractsroll off," they wrote.

In July, FBR & Co. analyst Lucas Pipes that if the issuesMurray Energy Corp.was facing with collective bargaining led to supply disruptions, CNX maybenefit. Later on that month, CNX's CEO Jimmy Brock in an earnings call that rising gasprices, hot summer weather and production cuts had caused the market for coalto improve.

Production for the Harvey mine included in the PennsylvaniaMine Complex increased in the second quarter compared to the firstquarter, while the Enlow Fork and Bailey mines saw slight decreases inproduction.

CNX is scheduled to announce its quarterly earnings on Nov.1.