Citi's 'More Constructive' Stance On Coal Leads To Warrior Met Coal Upgrade

Warrior Met Coal Inc HCC, a U.S.-based producer of and exporter of coal for the steel industry, has seen its stock gain more than 70 percent over the past year. There's still room for more upside, according to Citi.

The Analyst

Citi's commodities analyst upgraded Warrior Met Coal's stock to Buy (high risk) with a $33 price target.

The Thesis

Citi's global commodity team of analysts have set a met coal price target of $173/t in 2018 and $138/t in 2019. This bodes well for Warrior Met Coal as the stock is trading on a 23 percent free cash flow yield on this basis (ranges from 15 percent at $125/t to 39 percent at $225/t). Investors can expect this cash to be allocated towards shareholders, the analysts wrote.

Price Action

Shares of Warrior Met Coal were trading higher by 2 percent at $30.98 Thursday afternoon.

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