2023-08-03 15:35:37 ET
SunCoke Energy ( NYSE: SXC ) -6.6% in Thursday's trading as B. Riley downgraded the stock to Neutral from Buy with an $11 price target, trimmed from $12, seeing a lack of catalysts, modest capital returns relative to industry expectations, and impacts from lower prices for seaborne coke, met coal and thermal coal all serving as potential headwinds.
"While we expect the company's main customer to continue to operate its blast furnaces for decades to come, there is a well-telegraphed intention to reduce coke rates to their theoretical minimums in the years ahead - a headwind for the largest North American merchant coke supplier," analyst Lucas Pipes wrote.
After announcing a non-binding letter of intent to supply metallics from Granite City over a year ago, "investors are still left guessing about the economics of any deal as well as the future prospects of SunCoke's coke battery at Granite City, where the supply agreement expires in December 2024." Pipes also noted.
SunCoke ( SXC ) "performed well once again" in a stronger than expected Q2 , Pipes said, but it flagged lower logistics volumes as a result of weaker market conditions, and "even the high end of full-year guidance implies a slowdown in H2."
More on SunCoke Energy:
- Financial and valuation comparison to sector peers
- Analysis: SunCoke Energy: Cultivating Growth Through Strategic Partnerships
- Stock price return: Up 16% YTD, up 30.5% in the past 12 months
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SunCoke Energy cut at B. Riley on rising headwinds, uncertainties