JP Morgan cuts Aquila to underweight
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JP Morgan has lowered its recommendation on Aquila Resources to "underweight" from "neutral" on the basis that the part sale of Eagle Downs project will be difficult in the current coal environment.
Without the sale – which the investment bank thinks will be "challenging" given the downturn in coal and the availability of other coal assets – Aquila would have to rely on its $600 million of cash reserves to fund its capital expenditure.
The investment bank reduced its price target on the stock by 20 cents to $1.95.
"With the stock trading above our net present value (NPV), we see little reason to be positive near-term," JP Morgan said.
Aquila is up 0.5% to $2.17, extending yesterday's 3.9% gain after releasing its quarterly report which detailed cutbacks across its corporate offices as it continues to focus on minimum expenditure.