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On Tuesday, Jefferies research firm maintained a positive stance on Freeport-McMoRan shares (NYSE:FCX), reiterating a Buy rating and a $48.00 price target. Currently trading at $34.91, near its 52-week low of $34.89, the stock has shown a notable discrepancy with copper prices. Despite the observed 15% decline in Freeport-McMoRan’s stock since January 2024, the average realized price of copper has risen by 12%. According to InvestingPro data, the stock’s high beta of 1.87 indicates significant sensitivity to market movements.
The analysts at Jefferies highlighted that the historical correlation between Freeport’s share price and the copper market has recently diverged. They pointed out that while there are some reasonable explanations for this decoupling, their valuation estimates suggest that Freeport-McMoRan’s stock should be valued around $43 per share based on the current copper prices. The valuation rises to $48 per share when using Jefferies’ own price deck for copper. With analyst targets ranging from $25 to $62 and InvestingPro’s Fair Value analysis suggesting slight undervaluation, investors might find current price levels intriguing.
Freeport-McMoRan’s stock performance has shown a significant departure from the trends in the copper market over the past year. The $50.15 billion market cap company, which has been closely tied to the commodity’s price movements, has not mirrored the gains seen in the copper market. This unusual pattern has prompted Jefferies to reaffirm their valuation, suggesting that the stock may be undervalued. InvestingPro analysis reveals 8 additional key insights about FCX’s financial health and market position, available in the comprehensive Pro Research Report.
The research firm’s analysis indicates that despite the market’s recent undervaluing of Freeport-McMoRan shares, the fundamentals of the company remain strong, supported by the increasing copper prices. Jefferies’ price target of $48.00 reflects their confidence in the stock’s potential to realign with copper market dynamics.
Investors in Freeport-McMoRan will be watching closely to see if the stock’s performance will adjust to reflect the positive trend in copper prices, as suggested by Jefferies’ assessment. The firm’s reiteration of a Buy rating indicates their belief that the stock is likely to recover and align with the historical correlation to the copper market.
In other recent news, Freeport-McMoRan reported its third-quarter 2024 earnings, surpassing earnings per share (EPS) expectations with $0.31 compared to the anticipated $0.25. However, the company missed revenue forecasts, reporting $5.72 billion against the projected $6.01 billion. Analysts from Jefferies upgraded Freeport-McMoRan’s stock rating to Buy, raising the price target from $40.00 to $48.00, citing positive developments in Indonesia and potential benefits from tariffs on U.S. copper imports. Meanwhile, BMO Capital Markets adjusted its price target for the company to $50, down from $54, while maintaining an Outperform rating. President Donald Trump’s announcement of a new commerce probe into potential tariffs on copper imports has also impacted Freeport-McMoRan, as this move could benefit domestic producers. Additionally, the company anticipates securing an extension for its export license in early 2025, which is crucial for its operations. Despite some near-term challenges, Freeport-McMoRan’s long-term prospects remain favorable, with strong demand for copper driven by global electrification trends.
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