S&P/ASX 200 Index (ASX: XJO) coal shares have fallen dramatically since the start of the year, but could more pain be on the way?
New Hope Corporation Limited (ASX: NHC) shares have slid 16% in 2023 so far, while Whitehaven Coal Ltd (ASX: WHC) shares have dipped 26%.
However, in today's trade, Whitehaven shares are up 4.59%, while New Hope shares have gained 3.05%.
Let's take a look at what could be ahead for ASX 200 coal shares.
Image source: Getty Images
What are analysts saying?
Analysts are tipping earnings downgrades are on the way for ASX 200 coal shares amid lower thermal coal prices.
Barrenjoey head of resources research Glyn Lawcock said, as cited by the Australian Financial Review:
There are earnings downgrades in the market to come if thermal coal prices stay where they are compared to consensus. That's a given.
As the publication noted, Citi has lowered its earnings prediction for both Whitehaven Coal and New Hope by 47% for the 2024 financial year. The broker has cut its price target on Whitehaven from $9.25 to $9, while it has slashed New Hope's price target from $6.15 to $4.90.
Citi is tipping the coal price to now average US$195 a tonne in 2024, compared to an earlier forecast of US$330 a tonne.
Ord Minnett also recently downgraded New Hope to a "hold" rating with a $6.50 price target, as my Foolish colleague James reported last week.
On the flip side, Morgans has an add rating and a $6.65 price target on New Hope. It also has an add rating on Whitehaven with a $10.35 price target.
Thermal coal is currently fetching US$180 a tonne, according to a research note out of ANZ this morning.
ANZ senior commodity strategist Daniel Hynes and commodity strategist Soni Kumari, in a report released Friday, stated they "see strong growth in coal demand". They added:
Weather has played havoc with renewable energy's ability to mitigate power shortages in China, so reliance on coal-fired power is likely to increase in the short term.
With domestic coal output under pressure, imports of high calorific coal, like that from Australia, are likely to benefit.
New Hope reported an unaudited underlying EBITDA of $1.04 billion for the first half of FY23 in February, up 89% compared to H1 FY22.
Whitehaven reported an EBITDA of $2.7 billion for H1 FY23, up from $0.6 billion in the prior corresponding half.
Share price snapshot
The New Hope Corporation share price has soared 93% in the last 12 months.
Whitehaven shares have also leapt 74% over the same period.
New Hope has a market capitalisation of $4.7 billion based on the current share price, while Whitehaven has a market cap of $6.1 billion.
