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Investing.com - Freedom Broker downgraded Peabody Energy (NYSE:BTU) from Buy to Hold on Monday, while raising its price target from $16.50 to $18.30. The stock, currently trading at $17.10, sits well above its 52-week low of $9.61 but significantly below its high of $29.94. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value assessment.
The research firm cited weaker coal pricing as a constraint on Peabody’s near-term earnings, despite noting the company’s cost control measures, revised guidance, and operational resilience provide a "constructive setup" for the second half of 2025. The company maintains a healthy financial position with a current ratio of 2.21 and an attractive EV/EBITDA ratio of 3.16x.
Freedom Broker expects an earnings rebound in 2026, driven by stronger metallurgical coal volumes, with the Centurion mine described as "a cornerstone of growth and value creation."
The firm acknowledged that Peabody’s valuation remains hampered by thermal coal exposure, but identified "embedded growth levers, market tailwinds, and financial flexibility" as factors supporting multiple expansion.
Freedom Broker concluded that Peabody Energy now presents a "fair risk-reward profile," leading to the raised price target despite the downgrade in recommendation. The company trades at a P/E ratio of 14.8x and maintains a modest dividend yield of 1.75%.
In other recent news, Peabody announced a quarterly dividend of $0.075 per share on its common stock. This dividend will be distributed to stockholders on September 3, 2025, with a record date of August 14, 2025. Additionally, UBS initiated coverage of Peabody Energy with a Neutral rating, setting a price target of $14. UBS highlighted that Peabody’s operations produce strong free cash flow and provide significant exposure to both thermal and metallurgical coal prices. These developments reflect Peabody’s ongoing financial strategies and market positioning. Investors may find interest in the company’s dividend policy and the neutral stance taken by UBS.
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