TSX:TECK.A - Post by User
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retiredcfon Nov 01, 2021 9:04am
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CIBC Upgrade
CIBC UpgradeBase Metals Reporting, The Week That Was
Inflationary Cost Pressure Theme Expected To Continue
Our Conclusion
Teck reported strong financial results ahead of consensus estimates, First Quantum results were in line, and Lundin and Capstone reported financials below consensus expectations. A key theme across the group that reported was that inflationary cost pressures continue to apply pressure on unit operating costs. In some instances, this cost pressure is partially offset by foreign exchange impacts from a stronger USD. We expect this theme to continue through the remainder of reporting season, and we will continue to monitor costs, in an inflationary environment.
With this note, we have updated our models for financial statements and outlook commentary provided by the companies. We maintain our previous ratings, while making price target changes noted below. In the space, First Quantum remains our top pick for above-average exposure and leverage to the strong copper market, leading to further balance sheet deleveraging in 2021, with potential for capital allocation priorities in 2022 to include increased dividend returns and/or growth projects.
Prices Targets. We revise our price targets for Teck to C$40 (from C$35.50) on Q4/21E coal pricing