Zacks Investment Research upgraded shares of CONSOL Energy Inc. (CNX) from UNDERPERFORM to NEUTRAL on May 25, 2012, with a target price of $31.00.
We have upgraded CONSOL Energy to Neutral from Underperform as its decision to invest more in liquid rich assets and shy away from natural gas activities bodes well in the present depressed gas price scenario. We believe CONSOL's deep and diversified portfolio puts it at an advantage compared to peers. First quarter earnings per share were below our expectation as low gas prices and the increase in the cost per ton of coal production impacted the performance of the company. Dependence on a small group of consumers for bulk sales, along with stricter legislations and rigid penalties on underground mining, is of concern for underground miners like CONSOL Energy. However, its financial strength and increasing demand for thermal coal from developing Asian countries will benefit this low-cost coal producer.
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