Teck Resources Ltd. (TECK.B:CA) (TECK)
Scotiabank cut its 12 month target on Teck Resources to C$65 from C$69, as analysts factored in the likelihood of shareholder approval for the proposed merger with Anglo American, alongside expectations of front-loaded capital expenditures in the near term. Scotiabank noted that while Teck continues to deliver solid operational performance, particularly within its steelmaking coal and copper divisions, the company faces near-term cost pressures related to sustained investment in growth and infrastructure projects, including continued optimization at the QB2 copper mine in Chile.
The analyst emphasized that recent management issues at QB2 appear to be transitory, but remediation efforts and tighter regulatory oversight could lead to temporary disruptions and elevated spending. Despite these challenges, Teck’s long-term fundamentals remain supported by its high-quality asset base, rising copper production profile, and strong balance sheet.
Scotiabank’s revised target reflects a more conservative valuation approach, incorporating near-term capital intensity and integration risks associated with the Anglo American transaction. The firm added that, if successfully executed, the merger could enhance Teck’s global copper exposure and strengthen its position as a leading diversified miner, but short-term headwinds justify a cautious recalibration of price expectations.
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