Analysts Lower Price Targets for Teck Cominco

Lower metal prices in the third quarter is forcing analysts to rethink their quarterly earnings forecasts for Teck Cominco (TCK). Two separate analysts cut their targets on Tuesday.

Greg Barnes of TD Newcrest lowered his target by C$0.40 a share to C$1.16 a share (compared to a consensus of C$1.51). The bulk of that comes from either lower metal prices or negative provisional pricing adjustments. He was forecasting an average copper price of $3.75 a pound and an average zinc price of $0.90 a pound. They turned out to be $3.53 and $0.81, respectively.

He noted that Teck also had more carry-over coal tonnage from the 2007 coal year than previously thought. Since metallurgical coal prices went up so much in 2008, earnings will get dragged down by cheaper sales. He also cut the Fording distribution from his model.

John Hughes at Desjardins Securities cut his Q3 earnings target by C$0.15 a share, bringing it to C$1.10 a share. He also cited lower metal prices, but maintained very bullish 2009 targets of $4.00 a pound for copper and $1.25 a pound for zinc.

Both analysts continue to rate Teck a "buy." Mr. Barnes has a price target of C$57.00 a share, while Mr. Hughes has a target of C$67.60 a share.