FCX - Freeport-McMoRan: Upside Mostly Baked In Downgrade To Hold

2024-06-12 09:00:00 ET

Summary

• FCX has enjoyed great gains over the past few months, thanks to the Panama mine closure and higher copper spot prices.
• Combined with Indonesia operation's increased output and rich gross margins, the miner has reported higher top/ bottom lines with things likely to remain promising through 2025.
• However, based on historical trend, FCX is unlikely to offer higher dividends with most of its spot-price-linked capital appreciation already baked in.
• While some market analysts already project spot prices of up to $6.75 per pounds in 2025, potentially triggering another +50% upside, this development remains highly speculative.
• Based on FCX stock's established trading pattern between $35 and $43, investors may want to size their portfolios according to their risk appetite and investing style.

The Copper Investment Thesis Remains Promising Ahead

We previously discussed Freeport-McMoRan (NYSE: FCX ) in March 2024, discussing why we had rated the stock as a Buy attributed to the long-term electrification trend, with the miner likely to report higher top/ bottom lines as the copper spot prices rose.

Combined with the projected climb in the copper spot prices over the next few years, we believed that the miner might deliver both capital appreciation and higher variable dividend payouts, further sustaining its investment thesis despite the recent rally....

For further details see: