Freeport-McMoRan Eyes Major Gains From US Copper Tariff

Copper giant Freeport-McMoRan Inc. (NYSE:FCX [1]) delivered stronger-than-expected second-quarter results on Wednesday, driven by robust copper and gold sales, improved pricing, and reduced costs.

Following this positive earnings report, market observers are closely analyzing the company's prospects. Among these, Sam Crittenden, an analyst at RBC Capital Markets, has expressed a confident outlook for Freeport-McMoran.

He believes the company is exceptionally well-positioned to capitalize on the rising U.S. copper prices and the impending import tariff. After reviewing the second-quarter earnings, Crittenden reaffirmed his £54 price forecast [2] and a Sector Perform rating for the stock.

Also Read: Trump Shock Treatment Ignites Copper Boom--And It's Only Getting Started [3]

Crittenden noted that about one-third of Freeport's copper sales are tied to the U.S. market, where COMEX prices have surged to £5.85 per pound, well above the £4.47 per pound seen on the LME.

He estimated Freeport's realized price to be £4.93 per pound, significantly ahead of its peers.

However, he flagged uncertainty around the proposed 50% U.S. copper tariff, expected to take effect Aug.

1, as changes or exemptions could impact the price spread.

Crittenden lowered his 2025 EBITDA forecast by 3% following revised guidance at Grasberg. Due to lower ore grades, Freeport now expects to produce 1.54 billion pounds of copper and 1.3 million ounces of gold next year, down from 1.6 billion and 1.6 million, respectively. The 2026 outlook remains unchanged.

Crittenden said Freeport remains a leading copper investment, citing its scale, U.S. exposure, and strong balance sheet.

He also pointed to upside catalysts such as a potential Grasberg license extension, expansion projects in the Americas, and possible increases in shareholder returns. Risks include political exposure in Indonesia and copper price volatility.

Freeport posted better-than-expected second-quarter results [4], with adjusted earnings of 54 cents per share, beating estimates by 10 cents. Revenue rose to £7.58 billion, ahead of the £7.09 billion forecast, on stronger copper and gold volumes, lower unit costs, and favorable pricing.

Copper sales totaled 1.0 billion pounds at an average price of £4.54/lb.

Cash costs dropped to £1.13/lb, well below the company's prior guidance. Gold and molybdenum sales also topped expectations.

The miner started operations at its new Indonesian smelter in May and expects first cathode output in July. Capital expenditures reached £1.3 billion in the quarter, with full-year spending expected to total £4.9 billion.

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Freeport expects to benefit from the U.S. copper tariff beginning next month. With COMEX trading at a 28% premium to LME, the company estimates that every £0.10 of additional spread could add £70 million to second-half cash flow.

CEO Kathleen Quirk said Freeport remains "America's copper champion." The company continues to focus Indonesian copper sales on Asian markets. Still, it is evaluating shipments to the U.S.

It is also considering expanding its Miami, Arizona smelter, though building a new domestic facility remains unlikely.

Freeport reaffirmed full-year guidance of 3.95 billion pounds of copper, 1.3 million ounces of gold, and £7.9 billion in projected operating cash flow.

Crittenden reaffirmed a £54 price forecast and Sector Perform rating, valuing the company at 1.5x NAV and 8.0x 2025 EBITDA, in line with large-cap copper peers. He estimates Freeport is pricing in £5.06/lb copper, slightly above the current blended spot of £4.93/lb. He sees the company generating £4.5 billion in attributable free cash flow (7% yield) at spot prices.

He also points to several long-term catalysts, including a potential Grasberg license extension beyond 2041, brownfield expansion projects, and increased capital returns.

Still, he flags risks around political exposure in Indonesia, mine disruptions, and copper price volatility.

Meanwhile, Katja Jancic, an analyst at BMO Capital, maintained an Outperform rating for Freeport-McMoran but slightly lowered her price forecast from £55 to £54.

Price Action: FCX shares are trading lower by 0.59% to £44.57 at last check Thursday.

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References

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^ price forecast (www.benzinga.com)
^ Trump Shock Treatment Ignites Copper Boom--And It's Only Getting Started (www.benzinga.com)
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^ Freeport-McMoRan Eyes Major Gains From US Copper Tariff (www.benzinga.com)
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