Investors rushed to buy coal stocks, Whitehaven Coal Limited (ASX:WHC) and New Hope Corporation Limited (ASX:NHC), after Macquarie upgraded its outlook for thermal coal prices. Whitehaven Coal shares rose as much as 7.9% to a day’s high of AU$9.14 by afternoon, only a few cents shy of their 52-week peak of AU$9.33. New Hope shares surged as much as 8.7%, hitting a day’s high of AU$6.23 to come within a striking distance of their 52-week peak of AU$6.46.
Macquarie forecasts strong coal prices
Whitehaven and New Hope are among Australia’s leading coal mining companies. Their business benefits from strong coal prices. Macquarie sees coal demand continuing to exceed supply, resulting in higher coal prices. The brokerage raised its coal price projection by 25% to an average of US$410 a tonne for the second half of 2022. It lifted its 2023 price projection by 58% to an average of US$367.50. Moreover, Macquarie boosted its coal price forecasts for 2024 and 2025 by 114% and 124%, respectively.
Whitehaven share price forecast
Whitehaven shares have climbed about 200% since the beginning of 2022. According to TipRanks’ analyst rating consensus, Whitehaven stock is a Strong Buy. Macquarie upgraded its Whitehaven share price forecast from AU$10 to AU$12.
The stock seems to have risen faster than analysts expected, as the average Whitehaven share price target of AU$9.07 implies only about 3% upside potential. Whitehaven’s share buyback program, which could be expanded, may also provide additional catalyst for the stock.
Whitehaven scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
New Hope share price prediction
New Hope shares have gained more than 150% year-to-date. According to TipRanks’ analyst rating consensus, New Hope stock is a Hold based on two Buys and two Sells. Macquarie upgraded its New Hope share price prediction from AU$6 to AU$7. However, the stock has already outpaced analysts’ forecast, as the average New Hope share price prediction of AU$5.15 implies 12% downside potential.
New Hope stock is receiving favourable mentions on financial blogs. TipRanks data shows that financial blogger opinions are 97% Bullish on NHC, compared to a sector average of 74%.
Closing thoughts
Whitehaven and New Hope shares have delivered significant capital gains for investors this year despite the broad market volatility. Both companies also pay dividends with good yields. With coal demand and prices expected to remain strong, investors may see Whitehaven and New Hope continue to be attractive investments. However, with the shift from fossil fuels to renewable energy gaining momentum, it’s expected companies like Whitehaven and New Hope will need to find other business models in the longer-term.
