Zinger Key Points
- Analysts trimmed Freeport-McMoRan price targets post-Q4 FY24 results; Jefferies downgraded stock to Hold with a $40 target.
- Sales in Indonesia and higher costs impact Q1 outlook; long-term copper tax credits could offer $500M in cost savings.
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Several analysts revised the price forecast and rating for Freeport-McMoRan, Inc. FCX following fourth-quarter FY24 results reported yesterday.
Revenue stood at $5.72 billion, missing the consensus of $5.99 billion and adjusted EPS was $0.31, beating the consensus of $0.22.
For 2025, Freeport-McMoRan expects sales volumes to be 4.0 billion pounds of copper, 1.6 million ounces of gold, and 88 million pounds of molybdenum.
JP Morgan analyst Bill Peterson reiterated the price forecast of $48 and a Neutral rating.
The analyst writes that quarterly adjusted EBITDA of $2.11 billion met expectations, driven by strong realized pricing and cost efficiencies, offsetting weaker copper and moly sales and higher delivery costs.
The analyst adds that as somewhat unexpected, the spending falls within the company’s capital allocation framework and can help lay the groundwork for future growth.
Management expects Indonesia’s export license extension soon, though first-quarter sales are expected to be impacted, writes the analyst.
Peterson writes that the shipments remain paused, with maintenance brought forward, impacting first-quarter copper/gold sales (-14%/-36% Q/Q). The FY25 copper guidance cut suggests some lost sales won’t be recouped.
The analyst notes that any incremental cost savings may fall directly to the bottom line given North America’s NOLs/no royalties.
Furthermore, if copper qualifies for 45X tax credits, it could generate $500 million/year in cost savings, representing a potential upside to consensus estimates, adds the analyst.
The analyst expects cuts to first-quarter estimates (JPMe – 26% vs prior) due to weak sales guidance and higher unit costs. Earnings are projected to improve in second-quarter as deferred Indonesia sales begin to recover.
Raymond James analyst Brian MacArthur cue the price forecast from $53 to $49 with an Outperform rating.
The analyst says that FCX provides exposure to large, low-cost, long-life copper assets with significant gold production.
While Grasberg in Indonesia presents a jurisdictional risk, the 2018 transaction with the government has improved Grasberg’s risk profile, adds the analyst.
BMO Capital Markets analyst slashed the price forecast from $54 to $50 while reiterating an Outperform rating.
Meanwhile, Jefferies downgraded the company from Buy to Hold and trimmed the price forecast from $48 to $40.
Investors can gain exposure to the stock via Sprott Copper Miners ETF COPP and Themes ETF Trust Themes Copper Miners ETF COPA.
Price Action: FCX shares are down 1.79% at $37.81 at last check Friday.
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