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On Tuesday, B.Riley analyst Lucas Pipes adjusted the price target for Warrior Met Coal (NYSE:HCC) to $86.00, a decrease from the previous target of $90.00, while reaffirming a Buy rating on the company’s shares. According to InvestingPro data, the stock is currently trading near its 52-week low of $49.33 and appears undervalued based on Fair Value analysis. Pipes’s revision followed the company’s fourth-quarter earnings report, which revealed an adjusted EBITDA of $53.2 million, contributing to a total last twelve months EBITDA of $414.65 million. This quarter’s figure fell short of B.Riley’s projection of $64.7 million and the FactSet consensus of $61.3 million.
Warrior Met Coal announced its sales guidance for 2025, estimating a range of 8.2 million to 9.0 million tons, which is in line with B.Riley’s earlier estimate of 8.2 million tons. Despite this guidance, the company’s stock experienced an over 8% drop due to concerns over higher-than-expected capital expenditures, including mine development costs, and broader market worries after fourth-quarter realizations were reported at $155 per ton, which is 86% of the premium low-volatility (PLV) hard coking coal price. InvestingPro analysis shows the company maintains a strong financial position with a current ratio of 5.2 and a conservative debt-to-equity ratio of 0.08, suggesting ample liquidity to fund its development plans.
The analyst noted that the production outlook for 2025, excluding the approximately 1 million tons from the Blue Creek mine, seems conservative at 7.2 million tons at the midpoint for mines 4 and 7, especially when compared to the 2024 output of 8 million tons. This conservative estimate is seen as appropriate given the current demand environment.
Pipes highlighted that Warrior Met Coal has historically surpassed expectations on numerous occasions in recent quarters. The company has already invested $716.5 million into the Blue Creek development, which is part of an estimated total cost ranging from $995 million to $1.075 billion. Despite the lower realized prices raising questions about domestic producers’ competitiveness in the near term, the analyst does not foresee any risk to the timing and spending on the Blue Creek project. InvestingPro subscribers can access detailed financial health metrics and 8 additional ProTips that provide deeper insights into Warrior Met Coal’s investment potential, including its comprehensive Pro Research Report available exclusively on the platform.
The B.Riley analyst also revised the first-quarter and full-year 2025 adjusted EBITDA estimates downward from $64.2 million to $41.1 million and from $463.6 million to $432.4 million, respectively. The updated model now includes estimates for 2027, projecting Warrior Met Coal to trade at a 20.3% free cash flow to equity yield, based on a PLV of $225 per metric ton, as Blue Creek is expected to reach full-year production and capital expenditures decline. Despite the price target adjustment, the firm maintains its Buy rating on Warrior Met Coal stock.
In other recent news, Warrior Met Coal, Inc. reported its fourth quarter earnings, revealing that the results fell short of analyst expectations. The steelmaking coal producer recorded adjusted earnings per share at $0.15, a significant drop from the $0.81 consensus estimate. Its revenue also missed the mark, coming in at $297.47 million against the anticipated $305.04 million. The company attributed the weaker performance to a 34% YoY decrease in steelmaking coal prices.
On a brighter note, Warrior Met Coal reported a 23% YoY increase in sales volumes to 1.9 million short tons in Q4, and a 6% rise to 8.0 million short tons for the full year 2024. Looking ahead, the company provided 2025 guidance for coal sales of 8.2-9.0 million short tons and production of 7.8-8.6 million short tons. The company also announced a quarterly dividend of $0.08 per share. These are among the recent developments for Warrior Met Coal.
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