Core Natural Resources (CNR) is a strong buy opportunity despite near-term uncertainties, UBS Securities said.

"We see a buying opportunity in this high-quality diversified US coal miner which faces uncertainty on several fronts, including realization of merger synergies, ability to recover from a fire-driven loss in 1Q, insurance payouts, and the sustainability of the buyback," according to the note Tuesday.

The brokerage highlighted Core's solid fundamentals, including $38 million in net cash, resilient pricing, and over $500 million in expected annual free cash flow.

Core plans to return 75% of that to shareholders, largely through a $1 billion buyback program. The company is expected to return around $95 million per quarter to shareholders in 2025 and 2026, a level UBS described as rare among peers and well-timed at the bottom of the coal cycle.

Catalysts over the next 12 months include the Q3 restart of the flagship Leer South mine, potential $50 million to 100 million in insurance payouts, a $50 million working capital inflow, and $125 million to 150 million annually in merger synergies, according to the note.

UBS initiated coverage on Core Natural Resources with a buy rating and a $80 price target.

Shares of the company were up more than 4% in recent Wednesday trading.

Price: 70.32, Change: +2.94, Percent Change: +4.36