NEW YORK - Shares of Stillwater Mining Co. rose Monday after JPMorgan added the platinum and palladium miner to a list of preferred stocks, saying global supply problems should boost Stillwater's share price.
The stock rose 67 cents, or 5.3 percent, to $13.44.
Analyst John Bridges placed Billings, Mont.-based Stillwater on his "Focus List" with a $16 price target.
Power outages in South Africa, where about 80 percent of the world's platinum and 35 percent of its palladium are mined, should constrict supply, he said.
Further, a glut of Russian metals that had flooded that market for years dipped in 2007 to 24 metric tons from 70 metric tons and still is falling, he said.
With the amount of available palladium and platinum dropping, Bridges said he "the potential for a perfect storm," especially for palladium prices.
Palladium, which is sometimes used as a lower-cost substitute for platinum, is a key component of auto parts, such as catalytic convertors.
Palladium prices jumped 5 percent last Friday, helping to boost Stillwater shares. Bridges said the stock should continue to rise to at least his $16 target.
"We are confident of this upside due to the way palladium has lagged the commodity sector during the recent bull-market," Bridges said in a note to clients.
And demand for palladium should only grow further, as advancements in technology and willingness to control carbon emissions means more of the precious metal is needed, he said
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