Teck Resources stock rating maintained at Buy by Jefferies despite guidance cuts

Investing.com - Jefferies maintained its Buy rating on Teck Resources Ltd (TSX:TECK-B) (NYSE:TECK) with a price target of Cdn$80.00 despite the company’s recent guidance revisions. The mining giant, currently valued at $20.64 billion, trades at $42.22, near its 52-week high of $51.58. According to InvestingPro data, the stock shows strong momentum with a 46.62% return over the past six months.

The mining company updated its production guidance for its QB, HVC, and Red Dog operations, with the revisions being more negative than Jefferies had anticipated in its modeling.

Jefferies had already been forecasting production below the bottom end of Teck’s previous guidance range for QB, but noted that the actual revisions were worse than expected.

Following these guidance cuts, Jefferies believes a nil-premium merger between Anglo American and Teck Resources is now more likely to close, making this scenario its base case expectation.

The investment firm expects shares of both Teck Resources and Anglo American to rise from their current levels despite the production guidance reductions.

In other recent news, Teck Resources reported third-quarter copper sales of 110,300 tonnes, falling short of the average analyst estimate of 128,943 tonnes. The company’s copper production was also below expectations, with 104,100 tonnes produced compared to the projected 127,497 tonnes. Meanwhile, Teck Resources and Anglo American announced a merger of equals, forming the Anglo Teck group, which will become the world’s fifth-largest copper producer. This merger has prompted Berenberg to upgrade Anglo American’s stock rating from Sell to Hold, raising its price target to GBP23.00. S&P Global Ratings revised Anglo American’s outlook to positive from stable following the merger announcement. Benchmark reiterated its Buy rating for Teck Resources, maintaining a price target of $48.00. Teck CEO Jonathan Price emphasized that the company’s focus is on obtaining approval for the merger with Anglo American.

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