On Friday, BofA Securities adjusted its outlook on Teck Resources Ltd (NYSE:TECK), revising the price target to $87 from the previous $88 while sustaining a Buy rating on the stock. The adjustment follows Teck Resources' report of second-quarter 2024 coal sales that reached the upper end of their guidance and surpassed the estimates by Visible Alpha and BofA Securities. The company also reported better-than-expected realized pricing for coal.
The firm noted that Teck Resources is anticipating a smaller negative provisional pricing adjustment in steelmaking coal for the second quarter of 2024 than initially estimated. This is expected to be more than compensated for by a positive adjustment in base metals. Additionally, Bloomberg reported that Canada has approved for the sale of a 77% interest in Teck's steelmaking coal business to Glencore (OTC:GLNCY).
The transaction's approval came earlier than the analyst firm had anticipated, with the previous expectation being September 30, 2024. Due to the earlier-than-expected sale and the consequent loss of steelmaking coal-free cash flows, the price target was slightly reduced. The anticipated closure of the sale in the upcoming weeks should result in a significant cash inflow for Teck Resources, with the Glencore coal sale expected to bring in $6.9 billion before taxes.
The firm's outlook remains positive, especially with the QB2 copper project's ramp-up and the attractive copper growth options within Teck Resources' portfolio. The forthcoming cash from the Glencore transaction is also seen as a positive factor in maintaining the Buy rating on the stock.
In other recent news, analysts from Jefferies and Benchmark have maintained their "Buy" ratings for Teck Resources, highlighting the company's transformation into a dedicated base metals miner. The sale of a majority stake in EVR to Glencore is seen as a crucial step in this direction. However, Teck Resources fell short of Q1 profit expectations, primarily due to reduced sales volumes of steelmaking coal and a decline in zinc prices.
Meanwhile, Chilean President Gabriel Boric has assured an increase in production for state-run miner Codelco, which could positively impact the global copper industry. These are the recent developments shaping the future of these companies in the mining sector.
InvestingPro Insights
Teck Resources Ltd (NYSE:TECK) has demonstrated a robust financial performance that is reflected in its consistent dividend payments over the past 15 years, according to InvestingPro Tips. This consistency, coupled with the company's trading near its 52-week high and the anticipation of profitability this year, presents a compelling case for investors considering the stock.
InvestingPro Data highlights a market capitalization of $26.26 billion and a Price/Earnings (P/E) ratio of 22.14, which adjusts to 23.27 for the last twelve months as of Q1 2024. The company's strong price uptick over the last six months is quantified by a 24.59% return, reinforcing the positive sentiment around Teck Resources' stock performance.
For readers interested in deeper analysis and additional insights, InvestingPro offers a total of 6 additional tips on Teck Resources. These can be accessed through the company's page on InvestingPro: https://www.investing.com/pro/TECK. To enhance your investment research experience, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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