Freeport-McMoRan Set To Benefit From A Strong Project Pipeline, Says Analyst

BMO Capital Markets analyst reiterates an Outperform rating on the shares of Freeport-McMoRan Inc FCX and cut the price target from $47 to $45.

Freeport-McMoRan reported Q3 FY23 revenue growth of 16.4% year-over-year to $5.82 billion, beating the consensus of $5.41 billion. Adjusted EPS of $0.39 beat the consensus estimate of $0.34.

Freeport delivered another solid quarter, driven by better-than-expected copper sales, says the analyst.

Regarding the 2024 and 2025 outlook, the analyst writes that no changes were made to the consolidated copper/gold volume targets, with FCX continuing to target copper/gold volumes of 4.2blbs/1.8moz in 2024 and 4.2blbs/1.6moz in 2025.

Although the current copper pricing environment coupled with higher capital costs are not supportive of new major project investments, FCX continues to make minor investments and works on completing feasibility/economic studies in order to create optionality, notes the analyst.

FCX has a strong pipeline of organic initiatives/projects in the near/medium-term, as well as meaningful potential longer-term projects, a performance-based payout policy, and remains well-positioned to benefit from a positive secular outlook for copper, adds the analyst.

However, the analyst reduces FY23 and FY24 EPS estimates to $1.68 and $1.94 from $1.74 and $2.14, respectively, given the increase in energy costs.

Price Action: FCX shares are trading lower by 2.73% at $33.92 on the last check Friday.