Seaport Global analyst Mark Levin wrote to clients on Monday that he upgraded his rating on coal producer Peabody (BTU) - Get Peabody Energy Corporation Report to buy from neutral, citing rising metallurgical prices.
The call helped lift Peabody shares 2.7% to close at $26.39.
Cyclone Debbie caused several Australian mines to evacuate and shut down production ahead of the storm several weeks ago. Some firms declared a force majeure that closed in production, sending the commodity to a recent high of $314 tonne a ton. Levin said other miners like BHP Billiton (BHP) - Get BHP Group Ltd Sponsored ADR Report and Glencore also affected by the storm's fallout.
According to Seaport, benchmark prices for met coal, a major ingredient used in making steel, should average about $165 per tonne through yearend. He previously said he expected a $145 per tonne cost.
Levin also said he'd will be eyeing any management comments about plans for free cash flow going forward. He said a dividend isn't out of the question at Peabody.
Levin also reiterated a buy on Peabody rival Arch Coal (ARCH) - Get Arch Coal Inc Class A Report and said he would not be surprised to see the company authorize a stock buyback at the announced a buyback authorization
Arch shares rose 1.6% to 71.70.