Benchmark Co. analyst Nathan Martin maintained a Buy rating on Alliance Resource today and set a price target of $29.00.
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Nathan Martin’s rating is based on a combination of factors that suggest a positive outlook for Alliance Resource Partners (ARLP). Despite a slight miss in the second quarter adjusted EBITDA, the company is positioned to benefit from a more favorable regulatory environment and increasing electricity demand, which management views as the most encouraging domestic coal market since early 2023. The Tunnel Ridge segment’s move to a more favorable district is expected to enhance sales and reduce expenses in the Appalachia segment in the second half of the year.
Additionally, ARLP has secured long-term contracts for an additional 17.4 million tons for 2025-2029, indicating strong demand. Although there is an anticipated decline in average price per ton in 2026, management remains optimistic about maintaining margins through cost savings. The board’s decision to reduce the quarterly distribution is seen as a strategic move to provide financial flexibility for growth opportunities, such as the upcoming investment in a coal-fired power plant and potential ventures in the data center space. These factors contribute to the reaffirmation of the Buy rating and a target price of $29.