BMO Capital analyst Katja Jancic maintained a Hold rating on Arch Resources (ARCH – Research Report) yesterday and set a price target of $165.00.
Katja Jancic’s rating is based on a nuanced analysis of Arch Resources’ recent performance and future prospects. The company’s first-quarter adjusted EBITDA fell slightly short of both BMO Capital’s and the consensus estimates, primarily due to weaker margins in the metallurgical and thermal segments. Furthermore, the Curtis Bay Terminal closure poses a risk as it necessitates a second-half weightage for met coal volumes. Despite these challenges, the company’s operating targets for fiscal year 2024 remain unchanged, indicating stability in the company’s longer-term outlook.
In assessing capital returns, Jancic notes that Arch Resources’ quarterly dividend surpassed expectations, suggesting that free cash flow for the first quarter was better than anticipated. However, while the company is positioned to benefit from potential higher met coal prices in the long term, the near-term headwinds, including a lack of immediate positive catalysts, justify a cautious approach. Therefore, Jancic opted for a Hold rating, reflecting a balance between the recognition of Arch Resources’ low-cost position and the current challenges that could affect its near-term performance.
According to TipRanks, Jancic is a 4-star analyst with an average return of 15.4% and an 82.50% success rate. Jancic covers the Basic Materials sector, focusing on stocks such as Arch Resources, Nucor, and Reliance Steel.
In another report released on April 17, Citi also downgraded the stock to a Hold with a $170.00 price target.
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Arch Resources (ARCH) Company Description:
Arch Coal, Inc. engages in the production and distribution of thermal coal. It operates through the following segments: Powder River Basin, Metallurgical and Other Thermal. The Powder River Basin segment contains thermal operations in Wyoming. The Metallurgical segment contains metallurgical operations in West Virginia. The Other Thermal segment contains supplementary thermal operations in Colorado, Illinois and the Coal Mac thermal operations in West Virginia. The company was founded in 1969 and is headquartered in St. Louis, MO.
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