The Whitehaven Coal Ltd (ASX: WHC) share price is on course to end the week on a positive note.
In afternoon trade, the coal miner's shares are up 4% to $3.14.
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Why is the Whitehaven share price charging higher?
Investors have been bidding the Whitehaven share price higher today after brokers responded positively to its half year results.
In case you missed it, the coal miner reported a 106% increase in revenue to $1.44 billion and a 1,600% jump in EBITDA to a record of $632 million. This strong result was driven by high prices for thermal coal and allowed the company to announce a $400 million share buyback.
What was the response?
The response to its half year results was very positive from brokers, with a large number reiterating their buy ratings and price targets that are notably higher than current levels.
One of those was Goldman Sachs. This morning the broker retained its buy rating and lifted its price target on the company's shares to $3.90.
Based on the current Whitehaven share price, this implies potential upside of 24% for investors over the next 12 months.
And with Goldman forecasting dividends per share of 29 cents in FY 2022, which equates to a 9% yield, the total potential return stretches to 33%.
What did Goldman say?
Goldman said: "WHC is a compelling de-gearing and capital returns story in our view. We see the value accretive buyback (GSe NAV A$3.66/sh) as a change in capital allocation towards shareholder returns as the #1 priority, then brownfield expansions (Maules Creek to 16Mtpa) and lastly greenfield projects (Vickery)."
In addition, the broker highlights that the thermal coal price outlook is positive in 2022.
It said: "The thermal coal market remains tight due to supply side issues in Indonesia, Australian & Russia. WHC's realised thermal coal prices will likely flip from a 15% discount to benchmark in 1H FY22 to in-line with benchmark or a premium in 2H FY22."
"We upgrade our FY22/23/24 EPS by +27%/+122%/+106% after upgrading our coal price forecasts (thermal & met) by US$30/t for 2022&2023 due to ongoing market tightness," Goldman concludes.
