Massey Energy Stocks Slump After West Virginia Mine Explosion

April 6, 2010, By Alex Ion

An explosion on Monday at the Upper Big Branch mine in southern West Virginia that has left 25 workers dead and four missing, is the reason why Massey Energy stocks (the sixth largest U.S. coal producer by output) have slumped today from an old time high, by a massive 11%.

Worst of its kind since 1984, the disaster may lead to increased federal regulations on underground mining which in turn would mean rising costs for producers and rising costs for the end users.

“There was a considerable gain yesterday carried from the employment data Friday and a couple other economic data points,” said Stanley Nabi, New York-based vice chairman of Silvercrest Asset Management Group. “However, there are still a couple of minor disturbing things here that tell me that the market is entering a period of consolidation — the number of highs reached in the market has been shrinking, volume remains muted.”

For most of the analysts in the market Massey Energy shares are still undervalued. Same goes for the market sector it’s part of.

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