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Investing.com -- Analysts have upgraded Freeport-McMoRan to Buy, saying the market is overestimating the impact of a deadly mud flow that halted operations at its Grasberg copper mine in Indonesia.
The upgrade from Neutral to Buy comes with a price target of $48 a share, up from $42.50, reflecting expectations that Grasberg’s production can return to pre-incident levels by 2027.
The stock has fallen roughly 40% relative to peers since the company declared force majeure on Sept. 24 and cut 2026 Indonesia copper output by about 270000 tonnes, or 35%.
UBS analysts said concerns that Grasberg could face long-term production or value impairment appear overstated.
“We believe the market is pricing in an overly pessimistic outcome for Grasberg recovery, therefore see the risk versus reward as attractive,” the analysts said.
Dr. Kym Morton, a mining hydrologist with 45 years of experience also supported the view. She said the 800000 tonnes of mud blocking roughly 13 kilometers of tunnels could be removed within a year without sterilizing ore reserves.
Measures such as drilling to lower water levels are feasible and relatively low cost given the mine’s mountainous location.
The analysts also highlighted broader copper market conditions. With refined copper demand expected to grow about 3% in 2026 while supply rises less than 1%, ongoing disruptions and limited project approvals should keep the market in deficit, supporting higher prices.
Freeport trades at roughly 6.5 times estimated 2027 EV/EBITDA, below its historical 8-10 times range. UBS expects the stock to gradually re-rate over the next year as Grasberg returns to normal production.
Bernstein last month also upgraded Freeport-McMoRan to Outperform saying investors have been too harsh on Freeport after a deadly mud flow halted operations at its Grasberg mine in Indonesia.