Anglo American and Teck Merger Outlook Positive
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 6d ago
0mins
Should l Buy TECK?
Source: seekingalpha
- Merger Potential: Citi analysts upgraded Anglo American's rating from Neutral to Buy, raising the price target from £33 to £45, believing that the merger with Teck to form AngloTeck will create a top-tier copper producer, with the market underestimating its 80% copper earnings exposure.
- EBITDA Growth Expectations: Analysts anticipate that operational normalization at key assets could add $1.2 billion in EBITDA, while organic growth from the Collahuasi and Quellaveco copper assets could contribute an additional $1.4 billion in EBITDA over the next 5-7 years, significantly enhancing the company's profitability.
- Strategic Synergies: The Los Bronces-Andina copper joint venture is expected to unlock over $5 billion in value through synergies and capital deferral, significantly boosting Anglo American's net present value, while the Minas Rio iron ore joint venture has the potential to double production capacity and reduce unit costs, generating an estimated $4 billion NPV.
- Positive Market Reaction: Citi also upgraded Teck's rating to Buy with a price target of C$104, anticipating that the merger will proceed on current terms, further solidifying Anglo American's leading position among global diversified miners.
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Analyst Views on TECK
Wall Street analysts forecast TECK stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for TECK is 45.92 USD with a low forecast of 39.62 USD and a high forecast of 51.87 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
6 Analyst Rating
2 Buy
3 Hold
1 Sell
Hold
Current: 53.480
Low
39.62
Averages
45.92
High
51.87
Current: 53.480
Low
39.62
Averages
45.92
High
51.87
About TECK
Teck Resources Limited is a resource company that operates a portfolio of copper and zinc operations across North and South America. The Company’s projects include the Highland Valley Copper (HVC) Mine Life Extension Project, Galore Creek Project, Zafranal Project, and NuevaUnion. The HVC Mine Life Extension is located at the HVC site, approximately 17 kilometers (km) west of Logan Lake and 75 kilometers southwest of Kamloops. The Galore Creek Project is situated in Tahltan Territory in northwestern British Columbia, around 370 km northwest of Smithers. The Zafranal Copper Project lies in the Arequipa Region of southern Peru, within the prolific porphyry copper belt. The NuevaUnion Project is a undeveloped copper-gold-molybdenum mining venture in the Americas, located in Chile’s Atacama Region; its two deposits are about 40 km apart. Its Red Dog Operations is a zinc mine located approximately 170 km (105 miles) north of the Arctic Circle in northwest Alaska, near Kotzebue.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Investor Confidence: Billionaire investors like Stanley Druckenmiller and Chamath Palihapitiya assert that copper shortages are inevitable, with electrification expected to cause prices to go 'parabolic', prompting investors to position themselves through mining companies and ETFs.
- Supply Challenges: New mines require 10 to 20 years to permit and build, while ore grades are declining and capital expenditures have lagged over the past decade, creating a severe supply-demand imbalance that cannot keep pace with rising demand.
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