Morningstar price target $3.20

Excerpt from new research report released 18th December:

We reiterate our favourable view for no-moat Whitehaven Coal and our AUD 3.20 per-share fair value estimate. The stock remains substantially undervalued and a Global Best Idea. The key to our thesis is a recovery in thermal coal prices from sub-USD 50 per ton lows in September 2020 with an expectation that supply will respond to the cyclical low prices and demand in Asia will recover as the economic recovery from coronavirus continues. At USD 50 per metric ton, the vast majority of coal producers were losing money, so we never thought that price was sustainable.

The recovery in the thermal coal price already looks to be well underway. The price has risen strongly and is now around USD 80 per metric ton, a more than 60% improvement from recent lows. At the lows, the market was concerned with Whitehaven's balance sheet, but at the current coal price, we think the risk of a dilutive equity issue is off the table. It's also worth noting, the last time the thermal coal price was USD 80 per metric ton, Whitehaven shares traded close to USD 4 per share. So, while the shares are up more than 90% since the September 2020 low, we see significant leverage to the coal price and further upside in the shares.

Share price will be higher at the end of this week. GLTAH