Massey Energy (NYSE:MEE) Announces Weak Coal Shipments in 4Q

After Massey Energy (NYSE:MEE) announced their coal shipments for the fourth quarter were weak, FBR lowered their production estimates on their through 2013.

FBR said, "This morning, we are lowering our 2010–2013 production estimates by 1.5 MTs (4%), an average 21%, and our price target by 10%, to $50 per share, after the preannouncement of weak 4Q10 coal shipments. Production continues to struggle at the 36- to 37-MT level, despite the acquisition of 7+ MTs of high-margin Cumberland Resources last year.

"Despite the preannouncement, we believe that the possibility of Massey's takeout has improved in two different ways: (1) the bid-ask has just narrowed, with reduced estimates, and (2) the scarcity of met and steam production increases from the ongoing Australian and South African supply disruptions. However, the biggest factor for value change appears to be commodity prices, which could render our price target conservative. Even so, we now remain on the sidelines, as the leverage appears to be with the buyer, not the seller, with current operational issues and the MSHA's PPOV list."

FBR Capital maintains a "Market Perform" on Massey Energy Co., which was trading at $57.08 , up $0.69, or 1.22 percent, as of 11:57 AM EST. FBR lowered their price target on Massey from $56 to $50.