shank_ali/E+ via Getty Images
Ramaco Resources (NASDAQ:METC) -12.9% in trading Tuesday when UBS initiated coverage with a Neutral rating and a $21 price target, citing the metallurgical coal producer's valuation and concerns that premium hard coking coal prices are near a peak.
UBS analysts led by Curt Woodworth said they are neutral in Ramaco (METC), believing that coking coal prices will decline over the medium term and that the shares are fairly valued on its coal pricing platform, with some built-in premium for the company's rare earth reserve base.
But even as project-level economics are currently unclear, Ramaco (METC) offers investors “compelling option value on future expansion potential” over the long term, UBS said.
The bank also initiated coverage on Warrior Met Coal (HCC) at Neutral with a sell price of $68, believing the stock's valuation reflects a strong near-term outlook for the metallurgical coal, but Woodworth and his team expect the Prices will moderate in the first half due to the probable normalization of Australian supply, with a further rebalancing of metallurgical coal markets by 2025.
