Consol Gains as Raymond James Lifts Rating to ‘Strong Buy’

Consol Energy Inc., a coal and natural gas producer, soared the most in five months after Raymond James & Associates Inc. raised its rating to “strong buy” from “outperform.”

Consol gained $2.20, or 5.2 percent, to $44.16 at 10 a.m. in New York Stock Exchange composite trading after touching $44.50, the largest gain since July 7. The shares have fallen 11 percent this year.

Investors haven’t taken enough note of Pittsburgh-based Consol’s exposure to both coal and Marcellus shale natural gas and the possible sale of some of its metallurgical deposits, used to produce steel, Jim Rollyson, an analyst at Raymond James in Houston, said in a report.

“We believe the current market value of Consol remains sharply below what we consider the long-term asset value potential is of the coal, gas and other inherent assets within the company,” Rollyson wrote.

Consol will decide by the end of January whether to sell about 340 million tons of its reserves in Central Appalachia. The company may receive as much as $150 a ton for the coal, which could add as much as $350 million to its earnings before interest depreciation and amortization, Consol said last month.

Consol expanded its natural-gas business earlier this year. It brought the 16.7 percent of CNX Gas Corp. that it didn’t own for about $963 million and spent $3.48 billion to buy Dominion Resources Inc.’s gas and oil exploration and production business to capitalize on natural-gas output from the Marcellus field, a gas-bearing formation in Pennsylvania, West Virginia, New York and Ohio.

Shale gas is locked in non-porous rock that made the reserves inaccessible until new drilling technologies were perfected in the 1990s.

To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net.

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.

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