Benchmark maintains Buy on Core Natural Resources with $112 target

Tuesday, Core Natural Resources (NYSE:CNR), currently trading at $75.68, received continued support from Benchmark analysts, who reiterated their Buy rating and $112.00 price target on the company’s stock. According to InvestingPro data, analysts maintain a strong buy consensus with price targets ranging from $93 to $136, suggesting significant upside potential. The endorsement comes despite the fourth quarter adjusted EBITDA for the legacy CONSOL Energy (NYSE:CEIX) assets falling short of consensus expectations. Analysts focused on the recently provided full-year 2025 guidance and comments from CNR following the January merger completion between CEIX and Arch Resources (ARCH).

The company faced a setback last month with a combustion event at the Leer South mine, which is expected to limit coking coal sales to between 7.5 million and 8.0 million tons. Despite these challenges, InvestingPro analysis shows CNR maintains robust financial health with a current ratio of 1.52 and minimal debt-to-equity of just 0.06, providing strong operational flexibility. Development work at the site has resumed, and the longwall is anticipated to restart by mid-year. CNR’s management projects a decrease in the cash cost per ton for the metallurgical segment to the low $90s, down from the previous full-year range of $96-$100.

CNR also recently made the tough decision to reduce its workforce at the mine, a move that analysts believe could lead to additional improvements in cost per ton over time. On the topic of synergies, management has reportedly executed strategies that have achieved approximately one-third of its targeted $110 million to $140 million in savings. Analysts suggest that the actual savings could surpass these initial estimates.

Furthermore, CNR announced intentions to return about 75% of its free cash flow (FCF) to shareholders, including a sustaining quarterly dividend of $0.10 per share. Most of the FCF is slated for share repurchases, with the board authorizing a $1.0 billion buyback program. With the current share price pressure and a substantial amount of post-merger cash, cash equivalents, and short-term investments totaling $590 million, analysts speculate that the actual returns could exceed the promised 75% of FCF in the first quarter. InvestingPro analysis indicates the stock is currently trading near its 52-week low with an attractive P/E ratio of 5.54, while maintaining strong profitability with a 29.57% gross margin. Get access to 10+ additional exclusive ProTips and comprehensive financial metrics by subscribing to InvestingPro.

In other recent news, Core Natural Resources has completed its merger with Arch Resources, marking a notable event in the coal mining sector. This merger, finalized on January 14, 2025, combines two major players in the bituminous coal and lignite mining industry under the Core Natural Resources name. The financial statements of Arch Resources for the years ending December 31, 2024, and 2023 have been filed with the Securities and Exchange Commission and are now publicly accessible. This merger is anticipated to enhance Core Natural Resources’ market position and operational capabilities. Additionally, Jefferies has initiated coverage on Core Natural Resources with a Hold rating and a price target of $93.00. The firm highlighted the company’s unique asset base, which includes significant exposure to both seaborne metallurgical and thermal coal markets. Jefferies noted that Core’s diversified coal exposure and relatively low-cost mines could lead to less cyclical cash flows. Despite this, Jefferies suggests that other U.S. coal companies might offer better investment opportunities at this time.

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