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Warrior Met Coal Upgraded at B. Riley on 'Attractive Valuation'

Stock Markets Sep 23, 2022 12:22PM ET
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© Reuters. Warrior Met Coal (HCC) Upgraded at B Riley On 'Attractive Valuation'
 
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By Sam Boughedda

A B. Riley Securities analyst upgraded shares of Warrior Met Coal (NYSE:HCC) to Buy from Neutral, raising the price target to $50 from $48 in a note on Friday.

The upgrade is based on the company's "attractive valuation" after underperforming its "peer group by a whopping 71%," said the analyst.

"We believe the underperformance stems primarily from four factors. We do not anticipate a near-term resolution to all four, but there is a pathway for increased capital returns while the build-out of the company's flagship growth project continues. In our opinion, increased capital returns would be the most impactful near-term catalyst for the stock," the analyst added.

B Riley estimates that Warrior will end 2022 with $940 million in cash and net cash of $600 million, versus its $655 million in remaining growth capital commitments and 2023 FCFE of $298 million (excluding growth capex). "In short, by year end, Warrior's treasury should be sufficient to almost cover all of Warrior's debt and its multi-year growth project, making incremental cash available for shareholder returns," wrote the analyst.

"Warrior has been our only Neutral-rated coal stock for much of this year. Our upgrade here underscores our conviction in robust prices on the eve of a difficult heating season, as well as our improved views on Warrior as the benefits of higher for longer pricing accrues to all participants in the industry," he concluded.

Warrior Met Coal Upgraded at B. Riley on 'Attractive Valuation'
 

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