June 2 (Reuters) - Shares of U.S.-based coal miners rose after a broker raised his price target on the companies, saying coal prices would further increase in the next couple of years and that demand would remain strong.
“Metallurgical coal market remains very tight and the U.S. steam market is undersupplied as well with rising exports, new coal-fired generation, and modest amount of steam coal switching to metallurgical coal,” analyst David Khani of FBR Capital Markets wrote in a research report to clients.
The analyst increased his 2009 metallurgical coal price target to $250 per ton from $130 per ton. The analyst also raised the target of eastern price deck by about $20 per ton to about $100 per ton.
Khani raised the share price target for the whole coal sector by 87 percent, due to higher coal price forecast and added Patriot Coal Corp PCX.N as his top pick along with Consol Energy Inc (CNX.N).
Khani raised the price target on Alpha Natural Resources Inc ANR.N, Arch Coal Inc ACI.N, Consol Energy Inc (CNX.N), Foundation Coal Holdings Inc FCL.N, Massey Energy Co MEE.N, Patriot Coal Corp PCX.N and Peabody Energy Corp (BTU.N).
In May, the brokerage Dahlman Rose, too, issued a bullish report on the coal sector, saying the global metallurgical and steam coal prices will be sustainable for some time. (Reporting by Sakthi Prasad in Bangalore; Editing by Jarshad Kakkrakandy)