New Hope extends gains as analysts see positive outlook
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The news: New Hope shares climbed more than 3% on Wednesday, adding to gains of nearly 9% on Tuesday, as analysts remained largely optimistic on the coal miner.
The numbers: New Hope shares were up 3.1% to $4.16 at 1:30pm AEDT. The rally follows Tuesday's release of the miner's first-half results, which revealed a 35% rise in net profit and an improved interim dividend.
The context: Analysts mostly maintained previous ratings on the stock, though Citi trimmed its target price from $5.50 to $5.30. However, Citi retained its 'buy' rating on New Hope, noting that the conclusion of legal challenges provides its New Acland mine with a "clear runway" to its FY27 production target of 5 million tonnes per year.
Morgans also cut its price target, from $5.15 to $4.90 but kept its 'add' rating. Analyst Tom Sartor said New Hope's Bengalla mine provides "long-life, low-cost/high margin cash leverage to export thermal coal pricing", although coal prices are still navigating cyclical lows.
What they said: "We’re strong believers that physical coal markets will see future pricing cycles well above consensus expectations, supporting further periods of elevated cash flows and shareholder returns," said Sartor.
"[New Hope] is capable of supporting a material dividend yield in the interim for patient/value investors."
The sources: Citi research, Morgans research
