Goldman Retains Attractive View on U.S. Coal Stocks, Raises PT on SunCoke Energy (SXC)

August 21, 2012 10:35 AM EDT
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Price: $11.06 -3.07%

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Goldman reiterated their Conviction Buy on SunCoke Energy (NYSE: SXC) and raised their price target to $21 from $18.

Analysts at the bank also maintained their attractive view on Buy-rated Peabody Energy Corp. (NYSE: BTU) and CONSOL Energy Inc. (NYSE: CNX).

The bank also lowered near-term forecasts and raise long-term forecasts for met coal prices. In Q4 analysts see met coal at $185/MT (from $210). Mid-cycle prices were raised to $200 (from $175).

“Our Attractive coverage view on the US coal sector remains tactical and primarily driven by our views on Buy-rated SXC, BTU and CNX. While they are not necessarily met-coal focused, higher long-term met coal prices benefit all three,” said analyst Andre Benjamin.

“we now forecast an 8% average 3-year EBITDA CAGR vs. 6% before and 5% for other covered coal stocks. BTU and CNX are low on the cost curve and in our view likely to outperform as natural gas/thermal coal prices rebound in 2013 (comments from coal, utility and rail companieson 2Q calls indicate thermal S/D is showing early signs of improvement). All three have catalysts, no issues with their balance sheets and solid returns,” added Benjamin.

For an analyst ratings summary and ratings history on SunCoke Energy click here. For more ratings news on SunCoke Energy click here.

Shares of SunCoke Energy closed at $17.38 yesterday.

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Michael Calaizzo on 2012-08-21 14:38:03
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Goldman makes the rules as they

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