Shares of Ramaco Resources Inc (NASDAQ: METC), a developer of metallurgical coal, have about 24-percent upside potential that's contingent on continued execution by the company, according to B. Riley FBR.
The Analyst
Analyst Lucas Pipes initiated coverage of Ramaco with a Buy rating and $10 price target.
The Thesis
Ramaco has a growth-oriented profile, with six mines in production and the remainder in various stages of development, Pipes said in a Thursday note.
The company's flagship asset Elk Creek is likely to achieve production of 1.7 mt in 2018, which could increase to 2.2-2.4 mt in 2022, the analyst said.
Considering all facilities, the company expects annual production of 4 mt in 2022, Pipes said.
Exports should account for about 20 percent of Ramaco sales in 2018, but the share of exports is likely to improve in the years to come, according to B. Riley FBR.
"As Ramaco establishes its brand and product quality in the marketplace, realizations (both on domestic and international sales) should, we believe, start to move toward the high-vol A index," Pipes said.
High costs in Q1 — a function of weather, poor rail service and geology issues — may not persist, the analyst said.
"We are modeling costs around $60/t for company-produced tons. We estimate average tons, including purchased volumes, in the mid $60s per short ton at the mine."
The Price Action
Ramaco shares were up 1.24 percent at $8.18 at the time of publication Friday.
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Latest Ratings for METC
| Date | Firm | Action | From | To |
|---|---|---|---|---|
| Jun 2018 | B. Riley FBR | Initiates Coverage On | Buy | |
| Mar 2018 | Credit Suisse | Maintains | Outperform | Outperform |
| Nov 2017 | BMO Capital | Maintains | Outperform |
View More Analyst Ratings for METC
View the Latest Analyst Ratings
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