Bear of the Day: Taseko (TGB)

Neena Mishra

Tue, Jul 16, 2013, 10:55 PM

This year has been quite challenging for copper miners with declining demand for the metal and rising inventories. Disappointing results have in turn led to sharp downward estimates revisions, sending Taseko Mines to a Zacks Rank # 5 (Strong Sell).

About the Company

Headquartered in Vancouver, Canada, Taseko Mines Limited (TGB) owns and operates mining properties in Canada. The company currently produces copper and molybdenum.

Disappointing Results and Guidance

On May 2, 2013, Taseko reported it first quarter 2013 results. The quarter resulted in an adjusted loss of $2.9 million, down from net earnings of $3.1 million for the first quarter of 2013. On a per-share basis, the loss was $0.01 per share, below consensus.

Downwards Revisions

Due to disappointing results, quarterly and annual estimates have been revised sharply downwards in the past few weeks by analysts.

Zacks consensus estimate for the current quarter now stands at a negative $0.01 per share versus $0.04 per share, 60 days ago, while the full-year consensus estimate is $0.11 per share now, down from $0.21 per share.

The Bottom Line

While the company is trying to grow production and lower costs, lower copper prices resulting from high inventories and global slow-down continue to act as headwinds.

TGB is currently Zacks Rank # 5 (Strong Sell) stock and it has a longer-term recommendation of “Underperform”. Further the Zacks Industry rank of 231 out of 265 also indicates weakness in the near- to mid- term. Thus we think investors should avoid this stock for the time being.

Better Play?

Investors looking for exposure to the mining industry could look at Avalon Rare Metals (AVL) or Stillwater Mining (SWC)--both Zacks rank#1 (Strong Buy) stocks with “Outperform’ recommendation.