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B. Riley FBR drops coverage of Cloud Peak as coal producer continues to struggle

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B. Riley FBR drops coverage of Cloud Peak as coal producer continues to struggle

B. Riley FBR discontinued coverage of dozens of companies in various industries, including struggling Powder River Basin coal producer Cloud Peak Energy Inc., as part of a "reallocation of resources toward higher-return opportunities."

Cloud Peak's Antelope mine missed its volume guidance for 2018 due to "operational issues," and the company is "realizing tight margins" of about $1.28 per ton for its domestic shipments due to the low price environment for Powder River Basin coal, according to a Jan. 11 note.

"The company has responded to the higher seaborne thermal coal price environment and has guided to 5.5M export tons in 2018," B. Riley FBR said, "however, while the international markets for seaborne thermal coal have been strong, quality spreads widened sharply over the course of 2018, negatively affecting Cloud Peak's export margins."

The investment bank's final rating on Cloud Peak was "neutral," with a price target of $1.50 per share. Cloud Peak, which received a delisting warning from the NYSE on Dec. 26, 2018, opened trading Jan. 14 at 34 cents.

Cloud Peak told investors in November 2018 that it was conducting a strategic review of options that could include a sale. Its market value plummeted 83.9% since the third quarter of 2018, and it was removed from the S&P SmallCap 600 index Jan. 3.