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Investing.com - Jefferies has initiated coverage on Alpha Metallurgical Resources (NYSE:AMR) with a Hold rating and a price target of $110.00. According to InvestingPro data, AMR’s stock has shown recent momentum with a 7.8% gain over the past week, though it remains significantly below its 52-week high of $334.72.
Alpha Metallurgical Resources, the largest U.S. producer of metallurgical coal, is highly leveraged to changes in metallurgical coal prices, according to Jefferies. The company, currently valued at $1.47 billion, maintains a strong financial position with more cash than debt on its balance sheet and a healthy current ratio of 3.87.
The company has historically prioritized share buybacks over growth initiatives, a strategy that Jefferies expects will continue once metallurgical coal prices recover.
Jefferies anticipates that an eventual recovery in metallurgical coal prices will lead to higher free cash flow and a resumption of share repurchases for Alpha Metallurgical Resources.
This potential recovery and subsequent financial benefits will likely take 12 or more months to materialize, leading Jefferies to assign a Hold rating based on its $110 per share NPV-based target price.
In other recent news, Alpha Metallurgical Resources faced a challenging start to 2025, reporting a significant earnings miss in the first quarter. The company posted an earnings per share (EPS) loss of -$2.50, falling short of the forecasted $3.17, and revenue came in at $531.96 million, below the expected $590.5 million. This deviation from expectations was accompanied by a decrease in adjusted EBITDA, which dropped to $5.7 million from $53 million in the previous quarter. Alpha Metallurgical Resources also revised its shipment guidance for 2025 downward to 13.8-14.8 million tons and reduced its capital expenditure guidance to $130-150 million.
In response to the weak market conditions, Alpha Metallurgical Resources implemented cost-cutting measures, including idling production and closing several mines. The company also secured an amendment to its asset-based lending facility, increasing its size to $225 million, which provides additional liquidity. Analysts from B. Riley Securities and The Benchmark Company engaged with the company regarding these developments, highlighting the challenges posed by weak global steel demand and economic uncertainty. Despite these hurdles, Alpha Metallurgical Resources remains focused on internal opportunities, particularly the Kingston and Wildcat mine projects.
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