Why is the Whitehaven share price surging 7% on Wednesday?

The Whitehaven Coal Ltd (ASX: WHC) share price is among the best performers on the ASX 200 index on Wednesday.

In morning trade, the coal miner’s shares are up 7.5% to $9.96.

This means the Whitehaven Coal share price is now up over 250% since the start of the year.

Why is the Whitehaven Coal share price charging higher again?

Investors have been buying the coal miner’s shares today after the company was the subject of a couple of bullish broker notes.

One of those notes came from the team at Morgans, which has retained its add rating with a slightly trimmed price target of $11.20.

Based on the current Whitehaven Coal share price, this implies potential upside of 12.5% over the next 12 months.

But Morgans doesn’t expect the returns to stop there. It has pencilled in a massive fully franked $1.15 per share dividend in FY 2023, which equates to an 11.5% yield for investors.

Morgans likes the company due to its significant cash flow generation thanks to strong coal prices. It commented:

For investors, we see strong potential for a prolonged energy market dislocation where supply security commands a higher premium for longer. WHC is trading on a +30% free cash flow yield, with clear upside earnings/valuation risk, supporting further outsized shareholder returns over time.

Who else is bullish?

Another broker that sees further upside for the Whitehaven Coal share price is Bell Potter.

This morning the broker upgraded the company’s shares to a buy rating and lifted its price target on them to $11.00. This suggests potential upside of 10.5% over the next 12 months.

And like Morgans, Bell Potter is expecting a big dividend. It is forecasting a 96 cents per share fully franked dividend in FY 2023, which equates to a 9.6% yield for investors.

Its analysts are positive on Whitehaven Coal due to their belief that coal prices will stay high in the near term and drive strong earnings and dividend payments. The broker commented:

Upside risk to pricing across the energy complex in the northern hemisphere winter, exacerbated by sanctions on Russian supply, are the key drivers of our strong coal price, near-term WHC earnings and dividend outlook and recommendation upgrade.

The post Why is the Whitehaven share price surging 7% on Wednesday? appeared first on The Motley Fool Australia.

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More reading

• Broker says this ASX 200 coal share could offer a market-beating 29% return in 2023
• 5 things to watch on the ASX 200 on Wednesday
• Morgans tips these ASX 200 shares to jump 20%
• Up 240% in 2022, is it time to cash in the chips on Whitehaven shares?
• Here are the top 10 ASX 200 shares today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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