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On Monday, CONSOL Energy Inc (NYSE:CNX). (NYSE:CEIX) saw its stock price target increased by B.Riley from $109.00 to $138.00, while the firm kept a Buy rating on the stock. The adjustment follows a two-day non-deal roadshow (NDR) with CONSOL Energy (NYSE:CEIX)'s management team, including CEO Jimmy Brock and other executives. The discussions during this event led to several positive insights about the company's future.
The management team expressed strong confidence in achieving the synergies outlined previously. They also reported a smooth regulatory process so far and noted an increasingly bullish domestic demand outlook. Additionally, the company emphasized its focus on capital returns post-transaction closure. B.Riley's analyst believes CONSOL Energy could be well-positioned to pursue further mergers and acquisitions in the metallurgical coal sector in the long term.
Following the anticipated closure of the company's current deal, CONSOL Energy expects the integration process to boost the unlocking of additional synergies significantly. B.Riley has constructed an initial pro forma merger model for Core Natural Resources, projecting a 2025 adjusted EBITDA of $1,254.3 million, which includes $30.5 million in synergies. Based on these figures, the combined entity is trading at an attractive 6.6 times 2025 EV/EBITDA and offers a 10% free cash flow to equity (FCFE) yield.
The analyst's note concluded with the expectation that the firm's estimates for Core at spot prices will be included in the following day's Weekly report. The raised price target to $138.00 reflects the analyst's optimism about CONSOL Energy's growth prospects and the potential for increased shareholder value.
In other recent news, CONSOL Energy showcased its resilience in the second quarter of 2024, delivering a strong financial performance despite the temporary closure of the Port of Baltimore export channel. The company reported a net income of $58 million and an adjusted EBITDA of $125 million for the quarter. It also generated $59 million of free cash flow and sold approximately 5.8 million tons of Pennsylvania Mining Complex (PMC) product, with 2.9 million tons in the export market.
CONSOL Energy has increased its average coal revenue per ton sold range and adjusted its PMC sales volume guidance for 2024. The company also secured alternative port capacity and managed production costs, achieving robust cash margins per ton sold.
In light of these recent developments, CONSOL Energy remains focused on safe operations, managing spending, and securing long-term contracts. The company is optimistic about future industrial demand and aims to create value for shareholders. It has also increased its contracted book, completing fixed-price multiyear contracts. Despite some challenges, such as the temporary setback due to the Port of Baltimore closure, CONSOL Energy's contracted business remains robust, with 14.5 million tons contracted for 2025.
InvestingPro Insights
Recent data from InvestingPro adds weight to B.Riley's bullish outlook on CONSOL Energy Inc. (NYSE:CEIX). The company's P/E ratio of 7.69 suggests that the stock may be undervalued relative to its earnings, aligning with the analyst's view of an attractive valuation. This is further supported by CONSOL Energy's strong financial health, as indicated by two key InvestingPro Tips: the company holds more cash than debt on its balance sheet, and its cash flows can sufficiently cover interest payments.
The company's profitability is also noteworthy, with InvestingPro data showing a gross profit margin of 35.38% for the last twelve months as of Q2 2024. This robust profitability supports management's confidence in achieving synergies and pursuing potential mergers and acquisitions, as discussed in the B.Riley report.
Investors seeking more comprehensive insights can access additional InvestingPro Tips, with 11 tips currently available for CONSOL Energy. These tips provide a deeper understanding of the company's financial position and market performance, complementing the analyst's positive outlook on the stock.
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