The Whitehaven Coal Ltd (ASX: WHC) share price could be heading meaningfully higher from here in 2022.
That's the view of one of Australia's leading brokers, Goldman Sachs.
What is the broker saying about the Whitehaven share price?
As I mentioned here earlier today, the team at Goldman Sachs has been looking at the mining sector and remains positive on its outlook.
The broker expects this to be underpinned by an expected stabilisation and modest recovery in Chinese construction activity post Lunar New Year, further broad improvement in rest of the world demand, structural supply shortages, and low inventories across most commodities.
And with the Whitehaven Coal share price pulling back from its highs in recent months, its analysts see this as a buying opportunity for investors.
So much so, Goldman has upgraded the company's shares to a buy rating with a $3.60 price target. Based on the current Whitehaven Coal share price of $2.88, this implies potential upside of 25% over the next 12 months.
What did Goldman Sachs say?
Goldman commented: "We remain positive on thermal into 2022 with a strong recovery in global power demand and ongoing power shortages, strong gas prices, and supply side issues. We also remain constructive on met coal which we see as being undersupplied, but do expect prices to moderate in 2022."
"We upgrade WHC to Buy (from Neutral) with the stock down c. 25% off its 12-m high (A$3.64/sh) and trading at a 15% discount to our NAV & c. 50/10% FCF yield in FY22/FY23. WHC is a compelling de-gearing story in our view," it concluded.
For similar reasons, Goldman also has a buy rating and $1.80 price target on the shares of Coronado Global Resources Inc (ASX: CRN). This compares favourably to the latest Coronado Global Resources share price of $1.37.
