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Warrior Met Coal (NYSE:HCC) +1.8% in Thursday's trading as Citi upgrades shares to Buy from Neutral with a $75 price target, raised from $60, citing the company's growth profile, strong recent operating performance and potential for very strong free cash flow yields.
Investor focus for Q1 likely will be the Blue Creek ramp-up and capital spending, Citi's Alexander Hacking says, with the project still on track for first production in H2 2024 and shipments in mid-2025; he sees Warrior (HCC) generating 4%-15% free cash flow, rising to 9%-24% once Blue Creek is completed.
Hacking also raised his price target for Buy-rated Arch Resources (ARCH) to $185 from $160, citing the company's high-quality, low-cost met coal mines and relatively clean balance sheet.
The analyst says he remains mid-term constructive on met coal as a play on stronger Indian steel production.