- Shares of Massey Energy tumbled in premarket trading Tuesday following news that an explosion at the company's Upper Big Branch mine in West Virginia killed 25 workers, marking the worst U.S. mining disaster in more than two decades. Shares of the company sank $3.44, or 6.3 percent, to $51.25 in electronic trading before the opening bell.
- In an early morning announcement the coal company, one of the largest producers in the region, said four miners remained missing, but rescue efforts were suspended due to unstable conditions underground. The rescue mission would resume after bore holes could be drilled to allow for toxic gases to be ventilated from the sprawling mine about 30 miles south of Charleston, state and federal safety officials said.
- While traders retreated from the coal miner's stock, Jefferies & Co. analyst Michael Dudas held to his "Buy" rating. In light of Massey's tragedy, Dudas expects public and government scrutiny to intensify for the industry and for Massey in particular. "Although 2009 witnessed the lowest rate of fatalities in the U.S. coal mining industry - 34, certainly this tragic accident highlights the potential dangers surrounding mining underground in methane-rich seams," Jefferies analyst Michael Dudas said in a note to clients.
- Still, he believes its shares are under priced given Massey's product mix, well-capitalized infrastructure and solid margins in a challenging market. "We believe Massey Energy is a well capitalized Eastern coal producer and ranks as the largest, most diversified, and lowest cost coal producer in Central Appalachia," Dudas said. He held to his price target of $62.
Long Massey Energy in fund; no personal position