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* Q4 EPS $1.34 vs est $1.58/shr
* Q4 rev up 75 pct to $700 mln
* Stock rises over 3 percent (Adds analyst comments, stock rises)
Feb 21 (Reuters) - Walter Energy Inc's fourth-quarter profit missed Wall Street expectations, but the coal miner's stock rose over 3 percent on a forecast of improved operations and productivity this year, analysts said.
"They were very reassuring on production growth and were upbeat on an improvement of operations in Canada," said Lucas Pipes, of Brean Murray Carret & Co.
He noted that during a conference call with Wall Street analysts, Walter's Chief Executive Officer Walt Scheller said geological issues that reduced production at its key Mine No. 7 in Alabama last year were close to being resolved.
"On the U.S. operation side of the business, I'm pleased to report that Mine 7 is doing much better," Scheller said. "Production is ramping up and while we continue to experience some ventilation challenges ... we expect a significant increase in production from this operation in 2012."
Mine No. 7 is one of the largest mines producing steelmaking metallurgical coal in North America "and its contribution is critical for our success," said Scheller.
He said that mine was expected to account for just over a third of Walter's anticipated growth.
Other U.S. operations, including in Alabama and at Maple Mine in West Virginia, should contribute just under a third of anticipated metallurgical coal growth in 2012, he said.
Canadian production increases are expected to account for the final third of the company's targeted growth, he said. Walter also operates a mine and coal processing plant in South Wales.
Analyst Michael Dudas of Sterne Agee noted Walter expects 2012 metallurgical coal production in the 11.5 million to 13.0 million tonne range, representing an increase over 2011 met coal sales of 8.7 million tonnes.
"Contract pricing for Walter's most important met coal products may be closer to bottoming while management smartly reset the bar for 2012 performance by reducing sales targets by 10 percent earlier in January," Dudas wrote in a research note.
"We believe Walter Energy's risk/reward profile appears more balanced at current levels."
In its earnings release, Walter said costs and expenses more than doubled in the fourth quarter, while income from its U.S. operations fell 8 percent.
Earnings fell to $84 million, or $1.34 per share, from $92 million, or $1.72 per share, a year ago. Revenue rose 75 percent to $700 million.
Analysts on average had expected the company to earn $1.58 per share on revenue of $730.5 million, according to Thomson Reuters I/B/E/S.
Shares rose 3.3 percent to $67.66 in afternoon trading on the New York Stock Exchange. (Additional reporting by Sunayan Bhattacharjee in Bangalore; Editing by Gopakumar Warrier and Gerald E. McCormick) (Reporting by Steve James in New York)