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BMO Capital Markets downgraded shares of Teck Resources (NYSE:TECK) to Market Perform from Outperform, lowering the price target to C$46 from C$49 per share in a note to investors on Friday.
U.S.-listed shares of Teck Resources are down over 7% at the time of writing.
Analysts at BMO Capital Markets said the “thesis has played out,” and the firm has a more negative outlook.
“As we noted in our Q3/22 earnings first-blush flash, the market has looked past the strong earnings result towards negative longer-term commentary,” wrote the analysts, who labeled the stock as “relatively expensive.”
“According to our BMO base-case (generally bearish) near-term commodity price estimates, Teck is expensive versus peers on EV/EBITDA (NTM), P/CFO (NTM) and P/NAV (10%) metrics, particularly after reflecting revised 2023-25 production guidance and QB2 project capex guidance in our estimates,” they added.
They also noted that the key catalyst has been achieved, which was BMO recommending investors hold Teck for the potential sale of Fort Hills. In addition, the analysts said funds are more likely to flow out rather than in and that it is a difficult time for the QB2 project.
“Teck, formerly our top pick, has been a consensus long holding for quite some time. Recent market commentary indicates to us that investors are ready to move to a more ‘out of consensus’ name,” they explained.
