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Strong Buy Opinion on: WLT - Barrons says it could rise 54%

April 02, 2007 – Comments (1)

Barrons April 2nd edition says WLT could rise 54%
Sun Apr 1, 2007 1:49pm ET16

NEW YORK, April 1 (Reuters) - Walter Industries Inc. (WLT.N: Quote, Profile , Research) shares could be worth 54 percent more than the current price as the company spins off units and as demand grows for its main product, metallurgical coal used in steel production, Barron's newspaper said in its April 2 edition.

Tampa, Florida-based Walter is a coal and natural gas producer that also has home-building and financing operations.

Barron's said the company's shares have been hurt by production problems at an Alabama mine.

It nevertheless said Walter's parts could be worth $38 per share, 54 percent above Friday's closing price of $24.75 on the New York Stock Exchange.

The newspaper said Walter could produce up to 7 million tons of coal in 2007, helping boost profit 17 percent to $170 million, or $3.06 per share, on revenue of $1.3 billion.

Profit may increase 15 percent a year over the next five years, the newspaper said. Barron's also expects Walter by 2008 to sell or spin off its home-building and financing operations, becoming a pure-play coal company.

It said Matt Hagerty, who works at Pennant Capital, estimates that Walter shares sell for four times market value plus net debt, and could sell for six times, in line with other coal companies and valuations in recent mining transactions.

Pennant owns 2.5 million Walter shares and advocates a breakup, the newspaper said.

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