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Investing.com - Morgan Stanley (NYSE:MS) downgraded Teck Resources Ltd (NYSE:TECK) from Overweight to Equalweight on Tuesday, while raising its price target to $44.00 from $42.00. The mining giant, currently trading at $38.36 with a market capitalization of $19.1 billion, maintains a "GOOD" financial health score according to InvestingPro analysis.
The investment bank cited the stock’s recent re-rating, noting that Teck now trades in-line with pure-play copper peers following its strategic shift to focus on base metals, particularly copper.
The downgrade follows Teck’s sale of its steelmaking coal business (EVR) to Glencore (OTC:GLNCY), Nippon, and POSCO (NYSE:PKX), a transaction that generated $9.0 billion in proceeds and allowed the company to concentrate on metals essential for the global energy transition.
Morgan Stanley pointed out that Teck’s CEO recently acknowledged the market has recognized the company’s strategy, as evidenced by an increase in valuation multiples that now align with pure-play copper competitors.
The firm noted that Teck currently trades at 5.6x and 17.2x on Morgan Stanley’s 2026 EBITDA and EPS estimates respectively, above its 5-year average EV/EBITDA multiple of 5.4x and P/E multiple of 12.6x, while emphasizing that successful ramp-up of the QB2 project remains critical for any further re-rating.
In other recent news, Teck Resources Limited reported its first-quarter 2025 earnings, surpassing expectations with an earnings per share of $0.60 compared to the forecasted $0.37. The company’s revenue reached $2.29 billion, exceeding the anticipated $2.25 billion, driven by strong performance in the copper and zinc segments. Benchmark maintained its Buy rating and $55.00 price target for Teck Resources, highlighting the company’s robust organic growth pipeline and potential shareholder returns. Despite these positive results, Teck Resources faced operational challenges, including a month-long shutdown at its Carmen de Andacollo Operations in Chile due to mechanical issues and a temporary outage at the Quebrada Blanca port facility. The company anticipates QB production to be at the lower end of its full-year guidance, with net cash unit costs expected to be at the higher end of the projected range. Additionally, Teck Resources declared a dividend of $0.125 per share, payable on June 30, 2025, reflecting its commitment to shareholder value. Meanwhile, Granite REIT (TSX:GRT_u) has announced its upcoming Annual General Meeting for unit holders, with materials now available for review.
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