The Whitehaven Coal Ltd (ASX: WHC) share price has been on fire this year.
Thanks to sky high coal prices, this mining giant's shares have risen a whopping 235% since the start of the year.
Unsurprisingly, this makes the Whitehaven Coal share price the best performer on the ASX 200 index this year.
Can the Whitehaven Coal share price keep climbing?
The good news for investors is that one leading broker doesn't believe it is too late to snap up this high-flying coal miner's shares.
According to a note out of Bell Potter, its analysts have upgraded the company's shares to a buy rating and lifted their price target to $11.00.
Based on the current Whitehaven Coal share price of $9.26, this implies potential upside of approximately 19% for investors over the next 12 months.
And with the company generating significant free cash flow from its coal, Bell Potter is expecting a big dividend yield over the period. Its analysts have pencilled in a 96 cents per share fully franked dividend in FY 2023, which equates to a 10.4% yield for investors.
All in all, this brings the total potential return on offer to a little beyond 29%. Not bad for a share that has already risen 225% this year!
Coal price forecasts upgraded
Driving the broker's bullish view has been an upgrade to its coal price estimates for the coming years. It explained:
We have materially upgraded our coal price outlook: Thermal coal (FOB Newcastle) now averaging US$275/t in 2023 (+26%), US$200/t in 2024 (+62%) and US$125/t in 2025 (+56%); hard coking coal (FOB Queensland) now averaging US$250/t in 2023 (+5%), US$225/t in 2024 (+20%) and US$200/t in 2025 (+25%). Our long term estimates are unchanged: Thermal coal US$80/t (real) and hard coking coal US$160/t (real) from 2026 (previously from 2025).
The broker added:
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.
