Teck Resources' Q2 Performance and Strategic Outlook: Assessing Stifel's 'Hold' Rating and C$60 Price Target

In the second quarter of 2025, Teck Resources Limited (TECK) delivered a mixed yet resilient performance, navigating a challenging commodities market to post adjusted EBITDA of $722 million—a slight increase from the same period in 2024. While copper prices dipped and operational headwinds emerged, the company's strategic focus on value-accretive growth and shareholder returns has drawn attention from analysts like Stifel Canada, which recently assigned a “Hold” rating with a C$60 price target. This article evaluates the rationale behind Stifel's stance, dissecting Teck's Q2 results, operational resilience, and the broader market dynamics shaping its outlook.

Q2 2025: A Tale of Two Businesses

Teck's Q2 performance was marked by divergent outcomes across its core commodities. The copper business, despite a 10% decline in gross profit to $328 million compared to 2024, maintained stability through by-product revenues and reduced smelter processing charges. Production of 109,100 tonnes (including 52,700 tonnes from Quebrada Blanca) remained in line with prior-year levels, though revised guidance for 2025 reflects ongoing challenges at the Tailings Management Facility (TMF) and a shiploader outage at QB's port.

In contrast, the zinc business shone, with gross profit surging to $143 million in Q2—up from $67 million in 2024. Improved profitability at the Trail Operations and Red Dog, which exceeded sales guidance by delivering 35,100 tonnes, underscored the segment's strength. This divergence highlights Teck's ability to balance volatile commodity cycles, leveraging its diversified portfolio to mitigate risks.

Strategic Resilience: Capital Allocation and Long-Term Projects

Teck's Q2 report emphasized its disciplined capital allocation strategy, with $487 million in shareholder returns through buybacks. As of July 23, 2025, $2.2 billion of its $3.25 billion buyback program had been executed, supported by $8.9 billion in liquidity. This financial flexibility positions Teck to weather market volatility while funding transformative projects.

The most significant strategic move was the Highland Valley Copper Mine Life Extension (HVC MLE), sanctioned in July 2025 after securing environmental permits. This $2.1–2.4 billion project will extend the mine's life from 2028 to 2046, with an average output of 132,000 tonnes of copper annually. The initiative aligns with global demand trends, as copper remains critical to decarbonization and renewable energy infrastructure.

Stifel's 'Hold' Rating: A Cautious Balancing Act

Stifel Canada's decision to assign a “Hold” rating and a C$60 price target reflects a nuanced assessment of Teck's strengths and risks. While the company's Q2 adjusted EPS of $0.38 (up from $0.12 in 2024) and revenue growth of 12.3% to $2.023 billion are impressive, Stifel cites three key factors tempering enthusiasm:

1. Valuation Concerns: Teck's forward P/E ratio of 25.57 exceeds its 5-year average of 13.19, signaling potential overvaluation. Stifel's C$60 target implies a 13.8% upside from its July 2025 price, a conservative bet compared to the broader analyst consensus of $67.19.
2. Operational Headwinds: TMF delays and QB's shiploader outage have pressured 2025 guidance, with copper production revised down to 470,000–525,000 tonnes and net cash unit costs rising to $1.90–$2.05 per pound.
3. Macroeconomic Uncertainty: Commodity markets remain volatile, with copper prices fluctuating amid mixed demand signals from the energy transition. Stifel's rating acknowledges these dynamics, suggesting near-term growth may be capped until global demand clarity emerges.

Broader Commodities Market Dynamics

Teck's performance is inextricably tied to the commodities market, where copper and zinc are both beneficiaries and casualties of macroeconomic shifts. The energy transition's insatiable demand for copper—used in EVs, solar panels, and wind turbines—has bolstered long-term optimism. However, near-term price volatility and inflationary pressures on operating costs (up 8% year-over-year for Teck) complicate short-term gains.

Zinc, meanwhile, has seen a revival due to its role in infrastructure and battery applications. Teck's zinc business, with its improved Trail Operations and Red Dog output, is well-positioned to capitalize on this trend. Yet, Stifel's analysis suggests that zinc's cyclical nature and exposure to steel demand (a key driver) could introduce further uncertainty.

Investment Implications and Outlook

Stifel's “Hold” rating is not a dismissal of Teck's potential but a call for caution. The C$60 price target balances the company's operational resilience—evidenced by its strong balance sheet, buyback program, and HVC MLE—with the risks of overvaluation and near-term operational challenges. For investors, this rating suggests a wait-and-watch approach:

• Long-Term Investors should focus on Teck's strategic projects like HVC MLE and its position in the copper-driven energy transition. The mine's extension to 2046 ensures a stable production base, while the Zafranal and San Nicolás projects offer growth levers.
• Short-Term Investors may find the current valuation and operational headwinds a deterrent. However, the stock's 13.8% upside potential, coupled with a dividend yield of 0.8% (as of July 2025), provides a safety net for those willing to hold through volatility.

Conclusion

Teck Resources' Q2 2025 results highlight a company navigating the dual challenges of market volatility and operational complexity with resilience. While Stifel Canada's “Hold” rating and C$60 target reflect caution, they also underscore Teck's strategic strengths: a diversified portfolio, disciplined capital allocation, and a pipeline of long-term growth projects. For investors, the key lies in balancing these strengths with the realities of a high-valuation environment and macroeconomic uncertainty. As the energy transition accelerates, Teck's copper-centric strategy could yet justify a re-rating—provided it executes its capital-intensive projects flawlessly and maintains its operational discipline.