Coal stocks up after broker raises coal price view

(Reuters) - Shares of many U.S.-based coal miners touched a new year high 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).

Barring Peabody Energy Corp (BTU.N), which was up about 5 percent at $77.53, all other stocks touched a new year high in morning trade on the New York Stock Exchange.

Alpha Natural Resources Inc (ANR.N) rose 5 percent to $85.86, Arch Coal Inc (ACI.N) shares were up 5 percent at $68.12, Consol Energy Inc (CNX.N) was trading up almost 6 percent at $103.33.

While Foundation Coal Holdings Inc (FCL.N) was up 5 percent at $70.08, Massey Energy Co (MEE.N) was trading up 9 percent at $70.60, Patriot Coal Corp (PCX.N) was up 10 percent at $118.66.

The analyst upgraded Massey Energy to "outperform" from "market perform" based on the new coal price forecast.

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.

Following table provides the price target change for eight U.S. coal companies.

Companies Price Target

Current Prior

Alpha Natural Resources $168 $67

Arch Coal $101 $74

Consol Energy $196 $135

Foundation Coal $135 $95