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.
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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.
