New Hope Corporation Ltd (ASX: NHC) shares have dropped another 1.67% in early Tuesday morning trade. At the time of writing, the shares are changing hands at $4.12 a piece. So far this week, the shares have slumped just over 5% and they're now down 17.76% for the year-to-date.
The latest slump follows the Australian thermal coal miner's quarterly production and earnings update yesterday. New Hope achieved a 7.1% increase in saleable coal production and a 15.5% rise in underlying EBITDA, with coal sales and prices also improving. However, this was lower than market expectations.
Here's the latest update on New Hope shares from Macquarie Group Ltd (ASX: MQG).
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Slow start for New Hope shares
In a new note to investors, the broker confirmed its underperform rating on New Hope shares. It has also confirmed its $3.80 12-month target price. The shares were initially downgraded in September.
At the time of writing on Tuesday morning, the target price represents another potential 7.8% downside for investors over the next 12 months.
"Earnings changes: Incorporating the 1QFY26 results has decreased FY26e EPS by 35% (thin earnings). EPS forecasts are largely unchanged for FY27E and beyond," Macquarie analysts said in the investor note.
"Valuation: Our target price is unchanged at A$3.80ps."
"NHC's weak start to the year was driven by slower-than-expected performance improvement. FY26 guidance was also a miss versus market consensus but was within 2% of MQ forecasts," the broker said.
What else did the broker have to say about New Hope?
Macquarie stated that New Hope's latest quarterly report showed a weak production result, missing market expectations across coal, saleable production, and sales. The thermal coal miner's FY26 sales guidance also missed market expectations by 2% to 6%, but was largely in line with Macquarie's prior forecasts.
The broker said that New Hope's Bengalla mine's operational performance improved following significant wet weather and logistics delays in the prior quarter. Despite the improvement, performance still missed market expectations with run-of-mine (ROM), production, and sales by 2.1Mt, 2.0Mt, and 1.9Mt (20%, 8%, and 7%), respectively.
The company's New Acland mine ROM and sales of 1.7Mt and 0.8Mt, were a beat by 8% and 2% respectively. Its production of 0.7mt missed market expectations by 7%, reflecting the processing of lower-yielding coals on stock.
Macquarie analysts also weren't pleased with New Hope's FY26 guidance.
"NHC has released FY26 guidance for the first time, with group ROM of 16.7Mt ~2% below VA expectations. Production and sales are both 10.9Mt, missing consensus by 6%. We note the mid-point of guidance ranges are all within 2% of MQ forecasts," Macquarie said.
The analysts also noted that it was interesting that the miner didn't do any buybacks for Q1 FY26.
"NHC commented that the current focus is on maintaining strong dividend profile and the use A$900m franking balance. The company also sees more value in investing capital to its own project," the broker said.
