BMO Capital Markets adjusted its outlook on Teck Resources (NYSE:TECK) Ltd (TECK-B:CN) (NYSE: TECK), reducing the one-year price target to C$77 from the previous C$80. The revision comes even as the firm maintains an Outperform rating on the mining company's stock.
The adjustment in price target was primarily due to Teck Resources' announcement of a decrease in its production guidance for QB2 copper and molybdenum, alongside an increase in C1 costs. These factors were central to discussions in the company's recent earnings call. Despite the lower production forecast and heightened costs, Teck Resources' second-quarter results were reported to meet or exceed expectations.
"Teck reported Q2 results in line with or better than expectations; however, the company's cut to QB2 copper and molybdenum production guidance and higher C1 costs were the focus of today's conference call," said an analyst from BMO.
BMO Capital's stance remains positive regarding Teck Resources' operational outlook. The firm anticipates that the company will reach its planned throughput and recovery rates. However, the updated estimates now account for lower ore grades, leading to the revised price target.
"We continue to expect that the operation will achieve target throughput and recovery rates on plan, but reflecting lower grades in our estimates has cut our one-year target to $77.00/share (from $80.00/share previously). We maintain our Outperform rating," the analyst noted.
The mining company's financial performance and operational updates are closely watched by investors, as they can significantly influence the stock's market valuation. The maintained Outperform rating implies that BMO Capital Markets still sees potential for the stock to perform well relative to the market or its sector, despite the recent adjustments to its projections.
Teck Resources Ltd is a diversified resource company committed to responsible mining and mineral development with major business units focused on copper, steelmaking coal, zinc, and energy. Changes in production guidance and cost structures are common in the mining industry and can impact a company's financial performance and investment outlook.
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