Freeport-McMoRan Scores A Solid Q3, Analysts Say: ‘Benefit From High Copper And Gold Prices’

Freeport-McMoRan FCX closed Wednesday’s trading session 1.26% lower at £47.92 as the market further digested its third-quarter earnings results [1]. The leading copper miner reported slightly lower earnings per share, coming at £0.36 instead of the expected £0.37, while soundly beating the consensus revenue estimates of £6.44b, with an actual £6.79. The response from institutions has been mixed.

Raymond James raised the price target to £57 from £55, maintaining an Outperform rating.
RBC Capital Markets maintained a Sector Perform rating with a price target of £58.
Scotiabank BNS maintained a Sector Perform rating with a price target of £52.

Raymond James analyst Brian MacArthur issued an optimistic view on the miner, quoting sales of 1 billion lbs of copper and 550 Koz of gold in Q3.

He noted management’s expectations to reach 4.1 billion lbs and 1.8 Moz of gold for 2024 and a cash cost of £1.58 per lb of copper. Meanwhile, the RBC Capital Market highlighted strong free cash flow (FCF), driven by higher copper and gold prices. The firm estimates Freeport can generate £4.8 billion in FCF for 2025, yielding a 7% return at current spot prices.

“Freeport continues to benefit from high copper and gold prices,” RBC noted, emphasizing the company’s significant leverage to these metals, particularly with copper comprising 75% of its revenue. While acknowledging strong financials, RBC noted some near-term risks related to Freeport’s Indonesian smelter, which suffered a fire in October. This could delay production ramp-up into 2025.

Furthermore, the smelter issue could require an extension of Freeport’s concentrate export permit, which expires at the end of the year. While RBC projects a price target of £58, the potential upside scenario goes as high as £80. Scotiabank’s reaction to Freeport-McMoRan’s (FCX) Q3 2024 earnings was neutral, though it recognized the company’s stronger-than-expected performance.

Scotiabank’s estimate was lower than the market consensus, at £0.30. Despite the positive earnings, Scotiabank maintained its “Sector Perform” rating on FCX, highlighting a “relatively balanced risk-reward” profile, but slightly reduced its 12-month price target from £52 to £52. Analyst Orest Wowkodaw noted that the multi-year production guidance remained unchanged, with copper cash cost guidance in line with prior expectations.

Scotiabank pointed out that the multi-year production guidance remained unchanged, with copper cash cost guidance in line with prior expectations. It is worth noting that Wowkodaw downgraded Freeport-McMoRan to Sector Perform from Outperform on September 30, citing recent share price appreciation and the negligible implied return to its target for the downgrade after its shares rose 28% through September. Read Next:

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References

^ third-quarter earnings results (www.benzinga.com)
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