UPDATE: BofA Securities Upgrades Teck Resources Ltd (TECK) to Buy

BofA Securities analyst Timna Tanners upgraded Teck Resources Ltd (NYSE: TECK) from Neutral to Buy with a price target of $30.00 (from $27.00).

The analyst comments "We upgrade diversified miner Teck Resources Ltd (TECK) to Buy from Neutral and our PO to US$30 (CAD$37) from US$27 (CAD$33) on rising met coal prices and a better near-term outlook. Our income rating moves to ‘7’ (same/higher) from ‘8’ (same/lower). While we view long-term prospects challenged as global steel mills look to cut carbon use, we think the transition will take time and new coal mine capacity should be limited. We also expect investors to start focusing on its brownfield QBII start up in late 2022E, which dilutes the met coal component, and adds copper. Pure-play copper miners typically trade at a premium (6-8x EV/EBITDA) to TECK’s historical about 5x. While we estimate Q2E EPS is likely a trough due to depressed coal prices, we project H2E should see a sharp rebound in coal price realizations. Our PO still uses a modest 4x 2022/2023E EV/EBITDA and 20% premium to our DCF to offset a particularly strong Cu price view and reflect limited FCF due to QBII capex. We believe its historical average multiple could justify a theoretical fair value of $40."

For an analyst ratings summary and ratings history on Teck Resources Ltd click here. For more ratings news on Teck Resources Ltd click here.

Shares of Teck Resources Ltd closed at $22.60 yesterday.

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