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Teck's Elk Valley coal operations in B.C.Handout

Anyone looking for evidence that the commodities market is in a slump need look no further than Teck Resources Ltd. : The shares have fallen about 33 per cent from their recent high in January.

The latest dip comes as the Canadian diversified mining company updated its second-quarter guidance, saying that coal sales will be at the low-end of its previous forecast, amid higher operating costs, after Japanese steel mills deferred shipments. The reason relates to the devastating earthquake and tsunami that struck the country in mid-March, damaging mills there.

Orest Wowkodaw, an analyst at Canaccord Genuity, maintained a "buy" recommendation on Teck, but reduced his target price to $75 from $80. He also cut his 2011 earnings-per-share, cash-flow per share and EBITDA (earnings before interest, taxes, depreciation and amortization) by 5 to 6 per cent each. About half of Teck's sales come from coal.

"While the guidance reduction is disappointing, our 'buy' rating is supported by the company's very compelling valuation," the analyst said in a note.

He estimates that Teck will generate free cash flow of $3.7-billion (U.S.) in 2011 and $4.8-billion in 2012 - enough to support another dividend increase later this year.

Analysts in general have been standing by this stock during its recent decline, suggesting they see the setback as a temporary blip. The average target price, according to Bloomberg, stands at $69.15 (Cdn), or about 60 per cent above its current price. Among the 22 analysts following the stock, 18 recommend it as a "buy" with just one analyst recommending it as a "sell" (another three analysts have "hold" recommendations).

TD Newcrest cut its target to $66 from $68, and maintained an "action lift buy" recommendation. And John Hughes at Desjardins Securities maintained a "buy" recommendation and $76 target, although he has put his second-quarter earnings estimate of $1.30 a share under review.

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