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What Makes Analysts Bullish on Turquoise Hill Resources?

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Turquoise Hill Resources

Previously, we looked at analysts’ recommendations and target prices for Freeport-McMoRan (FCX) and Teck Resources (TCK). Though both these companies are into copper production, they have other operations as well. Freeport is also into energy exploration while Teck Resources mines zinc and coal as well. This makes these companies’ fortunes dependent on commodities (USCI) other than copper.

Turquoise Hill Resources (TRQ), which is partly owned by Rio Tinto (RIO), is a pure-play copper producer. The company is building the Oyu Tolgoi mine in Mongolia, close to the Chinese border, to cater to the Chinese copper demand. Let’s see how analysts are currently rating Turquoise Hill Resources.

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Consensus estimates

According to consensus estimates compiled by Bloomberg, Teck Resources has a one-year price target of $3.69, which represents a 35% upside over its April 15 closing price. Out of the five analysts surveyed by Bloomberg, three rate the stock as a “buy” while the remaining analysts rate the stock as a “hold.”

Interestingly, most analysts have similar price targets for TRQ as can be seen in the graph above. This is unlike the other companies that we have discussed earlier in this series. It’s important to note that TRQ is in the process of converting the Oyu Tolgoi mine to underground operations. Last year, the company secured a credit facility for the expansion program.

TRQ is a long-term play on copper prices and Chinese copper demand, as the complete ramp-up of Oyu Tolgoi will take more than a decade.

Southern Copper (SCCO) is another pure-play copper producer. In the next part of the series, we’ll explore how analysts are currently rating the company.

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