Warrior Met Coal ( NYSE: HCC ) -1.4% in Friday's trading, holding up relatively well compared to other coal producers and a broad range of energy stocks, as B. Riley Securities upgraded shares to Buy from Neutral with a $50 price target, citing its conviction in robust prices on the eve of a difficult heating season as well as improved views on the company.
Warrior Met Coal ( HCC ) has underperformed its peer group, up 8% YTD vs. an average 79% rise for U.S. coal producers, but B. Riley's Lucas Pipes believes increased capital returns would be the best near-term catalyst for the stock, noting Warrior's ( HCC ) treasury should be sufficient to almost cover all of the company's debt and its multi-year growth project by the end of this year, making incremental cash available for shareholder returns.
Over the longer term, "the structural case for higher for longer met coal prices as well as an eventual resolution of the ongoing labor dispute can further narrow down the recent performance gap," Pipes writes.
While met coal prices could fall as many other commodity prices have, Pipes expects "geopolitical conflict will support higher energy prices despite a weaker demand backdrop, including for met coal, as enough met is crossed into the undersupplied thermal markets."
Warrior Met Coal's ( HCC ) special dividends "appear poised to surge higher as their existing cash balance is virtually equal to the total cost of their flagship Blue Creek project," Daniel Thurecht writes in a bullish analysis published recently on Seeking Alpha .
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Warrior Met Coal raised to Buy at B. Riley on strong coal outlook