Base Metal Miners Analyst Watch: November Edition

by: Itinerant

It's usually around the middle of each month that we update our readers on analyst targets and recommendations for selected base metal miners. So without further ado, here is our November edition in this series. As always, we will be summarizing the latest entries in our database as well as providing some comparison to last month's edition.

Most companies mentioned in this article have more analysts following their progress than considered in our database. This difference is due to the fact that not all analysts release their predictions to, which is the source of the presented data.

Unchanged from last edition we are considering the following companies in alphabetical order: Freeport-McMoRan (NYSE:FCX), Hudbay Mining (NYSE:HBM), Southern Copper (NYSE:SCCO), Taseko Mines (NYSEMKT:TGB), Teck Resources (TCK), Thompson Creek Metals (TC), and Turquoise Hill Resources (NYSE:TRQ). Additionally, we have moved Nevsun Resources (NYSEMKT:NSU) from the gold miners' article to this series, and we have added Imperial Metals (OTCPK:IPMLF) to the database as a new entry.

Our data for these stocks is summarized in the table below. The first three columns list the company names, ticker symbols and share prices at the time of writing. Price targets (low, median and high) are listed in the following three columns. These targets are followed by a column giving the number of analysts providing data to and the mean recommendations given by these analysts ranging from 1.0 (strong buy) to 5.0 (sell). This concludes the data sourced directly from

The following columns are colored in light green and contain data derived from our source data. These data points are given in percentages related to the share price at the time of writing. The column titled "median-price" gives the difference between the share price and the median target price. The column titled "high-low" gives the difference between the high and the low target. The last four columns titled "target change" document the changes in price targets since the October report with the last columns giving the average change over the low, median and high price targets.

N.B. Price targets for Imperial Metals are given in Canadian Dollars and we have used a conversion rate of 1 Can$ = 0.96 US$. Data from only two analysts was available for Turquoise Hill Resources at the time of writing.

The difference between the current share price and the median price target is listed in column "median-price" and visualized in the diagram below. Under normal circumstances we would view a large value in this column as an indicator for the potential of disproportionate gains over the coming year.

Turquoise Hill Resources has increased this gap to 181% of the current share price (up from 156% last month). Political risk continues to be associated with the company's flagship project, the awesome Oyu Tolgoi mine in Mongolia, hence the low valuation by investors as opposed to the enormous potential should difficulties be overcome.

The moment of truth is also approaching for Taseko Mines. The decision on permitting of the New Prosperity will decide whether or not the potential indicated in the diagram below can be realized.

Imperial Metals brings up the rear in this ranking trading very close to the median price target for now, quite comparable to Freeport-McMoRan.

Column "high-low" measures the divergence in analyst opinions. The results from this column in the table at the top of this article are visualized in the next diagram.

While the potential is estimated as very high by analysts for Turquoise Hill Resources and Taseko Mines the opinions diverge substantially as to how high it is. Presumably analysts estimate the degree of political and permitting risk associated with the aforementioned projects of these two companies differently.

The highest degree of agreement in price targets is observed for Hudbay Mining and Nevsun Resources.

Monthly changes in price targets as listed in the table above are visualized in the diagram below.

On average price targets were raised by 4.8% since the last edition of our article series. Turquoise Hill Resources enjoyed the highest target upgrade followed by Taseko Mines. Hudbay Mineral's targets were the only ones suffering cuts during the last month, presumably as a result of the latest streaming deal with Silver Wheaton (SLW) at the Constancia mine in Peru.

The final diagram visualizes analysts' recommendation ratings. Imperial Metals takes the lead in this ranking from Taseko Mines this month. Southern Copper, Turquoise Hill Resources, Hudbay Minerals and Thompson Creek Metals receive recommendations of 2.5 or higher which indicates a rather bearish view by analysts. However, Southern Copper is the only company moving in the favorable direction as far as this recommendation is concerned as indicated by small red bars in the diagram indicating changes compared to last month.

Parting Shot

Comex copper futures declined significantly at the end of last week giving rise to worries about difficult times ahead for the mentioned companies and their peers. We will be watching the price development very closely in coming weeks. If this move is sustained in coming trading sessions we expect to see the effects in analysts' targets in next month's edition.

For readers who have found this article useful, we suggest to visit similar installments for gold, silver and uranium miners as well as streaming companies.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.