Whitehaven Coal shares extend gains as analysts lift ratings
Make us a preferred source
Make us a preferred source on Google
The news: Whitehaven Coal shares rose on the ASX as after the coal miner reiterated its full-year guidance on Friday following a mixed September quarter.
The numbers: Whitehaven shares were up 4.08% to $7.02 by 2:20pm AEDT, having closed 5% higher on Friday. The miner's Q1 result generally met expectations, with analysts making the following changes to their ratings on the stock:
- Bell Potter kept its 'buy' rating and $9 target price unchanged;
- Citi maintained its 'buy' rating and lifted its target price from $7.60 to $8;
- Macquarie reiterated its 'outperform' rating and increased its price target by 3% to $7.75;
- Morgans retained its 'add' rating but lowered its target price from $10 to $9.65; and
- Morgan Stanley stayed 'overweight' with an $8.35 price target.
The context: Bell Potter analysts noted that Whitehaven's balance sheet will "significantly" de-risk upon completion of the miner's 30% selldown of its Blackwater coal mine, expected in Q3 FY25.
The company's commodity and risk exposure are substantially improved through metallurgical coal asset ownership, the analysts said, with a positive long-term met coal outlook on constrained supply and robust global steel demand.
Macquarie analysts said that with run-of-mine production beating expectations in the first quarter, Whitehaven's sale should recover, particularly as metallurgical coal rises from seasonally low prices.
Morgans analysts noted that Whitehaven's metallurgical coal assets in Queensland transform the miner's equity appeal, offering superior scale, diversification and investor reach.
They believe that physical coal markets will see future price cycles "well above" consensus expectations, to which an enlarged Whitehaven offers "compelling" cashflow and returns leverage.
What they said: "Soft steel markets temper near-term earnings and share price momentum, suggesting patience is required, although the share price/valuation still looks too dislocated from reality and we flag supportive forces into 2025," Morgans analysts said.
The sources: Morgan Stanley research, Citi research, Macquarie research, Morgans research
