Ramaco Resources’ stock (NASDAQ:METC) plummeted by 12.9% during Tuesday’s trading following UBS’s initiation of coverage with a Neutral rating and a $21 price target. The renowned financial institution cited concerns about the producer’s valuation and highlighted the notion that premium hard coking coal prices may be approaching their peak.
UBS’s analysts, led by Curt Woodworth, expressed their neutral stance on Ramaco (METC). They projected a potential decline in coking coal prices over the medium term and indicated that the stock is fairly valued based on their coal price assessment. They also suggested that the company’s rare earth reserve base might have some embedded premium.
Despite the current ambiguity surrounding project-level economics, Ramaco (METC) offers what the bank described as “compelling option value on future expansion potential” for long-term investors, according to UBS.
UBS also included Warrior Met Coal (HCC) in its coverage, assigning a Neutral rating and setting a $68 price target. The financial institution believes that the stock’s valuation reflects a robust near-term outlook for met coal. However, Woodworth and his team anticipate a potential moderation of prices in the first half of the year, attributed to the likely normalization of Australian supply, with further market rebalancing expected by 2025.