Freeport-McMoRan (FCX) Giving Mixed Signals Ahead of Earnings
Freeport-McMoRan's stock (NYSE:FCX) are under pressure into earnings, trading 10% lower on the past month leading into this morning's print. Analyst expectations for Q3 2025 stand at an EPS of £0.41, with a wide range on the street, spanning from £0.33 to £0.54. Q4 2025 estimates are pegged at £0.22.
For the full fiscal year 2025, the projected EPS is £1.46, with a range of £1.30 to £1.67. This translates to an anticipated year-over-year growth rate of approximately 7.89% for Q3, a figure that markets will be closely scrutinizing. Recent earnings reports have been a mixed bag.
While Q1 2025 saw FCX meet expectations with an EPS of £0.24, the company soared past estimates in Q2 2025, reporting an EPS of £0.54, a full £0.09 above projections. This strong Q2 performance was fueled by higher-than-expected copper sales volumes and a significant reduction in net unit cash production costs, which reached £1.13 per pound. The early start-up of the company's new copper smelter in Indonesia and a tripling of the U.S. copper sales premium further bolstered results, adding margins and cash flows.
The average one-year price target for FCX is currently £50.75, suggesting a potential upside of 10.80% from a recent price of £45.80. The company also holds an "Outperform" rating, with a GF Value estimate of £48.11, hinting at a further potential upside of 5.04%. These positive outlooks are largely based on the expected increase in copper sales in the second half of the year, the advancement of the company's innovative leach program targeting an 800 million pound per annum production increase, and the operational efficiency gains from the new Indonesian smelter.
While the prevailing sentiment leans towards optimism, a more cautious perspective is warranted. The seemingly positive Q2 earnings were, in part, fueled by factors that may not be sustainable. The tripling of the U.S. copper sales premium, for instance, could be a temporary anomaly rather than a new normal.
Moreover, the Indonesian smelter, while promising, carries the inherent risks of any new large-scale operation, including potential delays, cost overruns, and operational hiccups. Analyst estimates, particularly for Q4, show a wide divergence, highlighting the uncertainty surrounding the company's near-term performance. Furthermore, the projected 7.89% year-over-year growth for Q3, while positive, may already be priced into the stock, leaving limited room for significant upside surprise.
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