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How Analysts Are Rating Copper Miners in 1Q17

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Feb. 27 2017, Published 4:50 p.m. ET

Analyst ratings

The 4Q16 earnings season is nearly over, and most copper miners have reported their earnings for the quarter. Freeport-McMoRan (FCX), the world’s second-largest copper mining company, released its 4Q16 earnings on January 25 while Southern Copper (SCCO) released its 4Q16 earnings on January 31.

Teck Resources’ (TECK) 4Q16 financial results were released on February 15. Glencore (GLNCY), the diversified mining and trading giant, released its preliminary 2016 annual results on February 23.

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Copper prices

Copper closed at $2.64 per pound on February 24, 2017. So far, copper has risen 6.0% in 2017. Before that, in 2016, copper prices rose 17.4%, ending a five-year price drought. Copper has been on a losing streak since 2011. Before 2016, LME (London Metal Exchange) copper prices fell every year since 2011. Only in 2012 did copper hold steady, closing roughly flat compared to the previous year.

Copper prices have shown strength this year on supply side issues. Copper’s supply has been hit due to issues at BHP Billiton’s (BHP) Escondida mine and Freeport-McMoRan’s Grasberg mine (RIO). Higher energy prices are also supporting copper prices (XME).

Series overview

Higher copper prices boosted copper miners’ 4Q16 earnings. Generally, analysts revise their target prices and recommendations following a company’s earnings release to reflect the earnings and outlook provided by the company’s management. In this series, we’ll analyze how analysts rate leading copper producers in 1Q17. We’ll also see how ratings changed after 4Q16 earnings.

Let’s begin by looking at analyst ratings and target prices for Freeport.

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