Chinese chip stocks jump as Beijing reportedly warns against Nvidia’s H20
Investing.com -- Morgan Stanley raised its rating on Freeport-McMoRan (NYSE:FCX) to Overweight from Equal-weight, saying the miner is poised to benefit from new U.S. tariffs on semi-finished copper products, which account for most of its North American sales.
The brokerage said the market is underestimating the impact of the Section 232 tariffs announced last week, which impose a 50% duty on copper rods, wires, sheets and tubes but exclude upstream products such as ores, concentrates and cathodes.
While the initial announcement triggered a selloff in copper prices and Freeport shares, with the stock falling nearly 10% on July 30, Morgan Stanley (NYSE:MS) said the company remains well-positioned because about two-thirds of its North American volumes are copper rods.
Those products are priced on annual contracts at a premium to metal exchange benchmarks and should see price increases starting in 2026.
Freeport has capacity to produce up to 1 billion pounds of copper rod in the United States, out of guided North American volumes of about 1.33 billion pounds, the bank said.
Morgan Stanley also cited a positive outlook for gold and set a price target of $48 for the stock.
"We believe the market is not appreciating the benefits that will accrue to FCX from S232 copper tariffs," analysts at Morgan Stanley said.
"We expect that FCX will be able to raise pricing in its annual copper rod contracts for 2026, which account for the majority of the company’s North America sales volumes"