Why Teck Resources Announced a Share Buyback



Teck Resources

Teck Resources’ (TECK) 2017 price action has lagged the broader metals and mining space. Last year, the company was among the biggest gainers in the mining sector. But the stock’s 2017 price movement has disappointed the markets. Teck Resources has also announced a share buyback. Generally, companies announce a share buyback when they believe their stocks are undervalued by the markets.

Analysts’ views

Analysts have a favorable view of Teck Resources. The stock has received a “buy” or higher rating from 18 of the 22 analysts polled by Thomson Reuters on December 6. Three analysts rate the stock a “hold,” while one analyst has given it a “sell” rating.

According to the consensus estimates compiled by Thomson Reuters, Teck Resources has a mean one-year price target of $34.30, which represents a 50.5% upside over its closing price on December 6. Teck Resources’ price target implies the highest upside among the stocks we’re covering in this series. Freeport-McMoRan (FCX) and Glencore (GLEN-L) are trading 13.2% and 21.3% below their mean consensus price targets.


Teck Resources has exposure to copper and zinc, both of which have favorable demand-supply dynamics. Coking coal prices have been consolidating. The current strength in coking coal prices has been much more fundamental than last year when China’s capacity cuts and weather disruptions in Australia triggered a rally in spot coking coal prices. Teck Resources is the second-largest seaborne coking coal supplier after BHP Billiton (BHP).

In the next part, we’ll see how analysts are rating Southern Copper.

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