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Why Turquoise Hill Resources’ Analyst Ratings Matter

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Analyst ratings for TRQ

Turquoise Hill Resources (TRQ) has received a “strong buy” rating from two analysts, while three analysts have rated the stock a “buy.” The remaining three analysts polled by Thomson Reuters on October 6 have rated the stock a “hold.” None has issued a “sell” rating on TRQ stock.

Turquoise Hill Resources has received a mean consensus one-year price target of 5.55 Canadian dollars from the analysts polled by Thomson Reuters. The stock’s target price implies a potential upside of 35.6% over its closing price on October 6. Notably, on September 15, CIBC initiated coverage of TRQ with an “outperform” rating and a target price of 5.00 Canadian dollars.

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Business overview

Remember, Turquoise Hill Resources, which is partly owned by Rio Tinto (RIO), is a pure-play copper producer like Southern Copper (SCCO). TRQ is converting the Oyu Tolgoi mine to underground operations. In 2015, it secured a credit facility for the expansion program.

Turquoise Hill Resources is a long-term play on copper prices (FCX) (AAL-L) and Chinese copper demand, given its geographical proximity to China. But the expansion at Oyu Tolgoi will take more than a decade, and so the company’s copper production could start to gain traction toward the end of this decade.

However, while proximity to China is an opportunity for TRQ, it comes with its own set of risk factors. TRQ faced a backlash from China after Tibet’s spiritual leader, the Dalai Lama, visited Mongolia in 2016. The company’s copper shipments to China were suspended for a few days, highlighting the political risks that TRQ faces in landlocked Mongolia.

You can visit Market Realist’s Copper page for ongoing updates on this industry.

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