With a strong molybdenum market and rising production, Desjardins Securities analyst John Redstone thinks shares of Thompson Creek Metals Company Inc. (NYSE:TC) could more than double in 12 months. He is upgrading the stock to "top pick" from "buy," and raising his one-year target price to C$32.67 a share (the shares currently trade in the C$16 range).
Mr. Redstone notes that combined production from the company's Thompson Creek and Endako mines is likely to increase 56% in 2008 (to 25 million pounds) and another 36% in 2009 (to 34 million pounds).
"We believe that problems encountered in Q4 [a rock slide at Endako and lower grades at Thompson Creek] are solvable and that Thompson Creek's production will rise going forward," he wrote in a note to clients.
Mr. Redstone is also bullish on the market for molybdenum, as he sees demand outstripping supply in both 2008 and 2009. He expects prices to average $35/lb and $40/lb in those years, respectively, and is anticipating significantly lower inventories at the end of 2009.