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Pro Analysis

Buy Peabody Energy as prices and coal demand stabilize, Jefferies says

A dump truck moves coal at the Peabody Energy Somerville Central mine in Oakland City, Indiana.
Luke Sharrett | Bloomberg | Getty Images
A dump truck moves coal at the Peabody Energy Somerville Central mine in Oakland City, Indiana.

Stabilizing coal demand, consistent natural gas prices, and a sympathetic Trump administration will offset weakness in coal prices and revitalize Peabody Energy, according to one analyst.

Jefferies initiated coverage on Peabody with a buy rating, citing better times ahead for the beaten-down energy industry.

"Coal is a tough industry, but, in the case of Peabody, the positives should outweigh the negatives," analyst Christopher LaFemina wrote Tuesday. "Our analysis suggests that US thermal coal demand is stabilizing due to strength in natural gas and that the downside risk to coal prices is more than fully discounted in Peabody shares."