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Why Freeport-McMoRan the Most ‘Hold’ Ratings among Top-Rated Copper Stocks

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Top-rated copper stocks

Freeport-McMoRan (FCX) is ranked fourth in our select group of copper mining stocks based on the percentage of “buy” or higher ratings. The stock has received a “strong buy” rating from one analyst, while five analysts have rated FCX a “buy.”

Overall, 26% of analysts polled by Thomson Reuters on October 6 have rated a “buy” or higher, while three analysts have a “sell” rating on FCX. But the majority of analysts (61%) rate the stock as a “hold” or some equivalent.

According to consensus estimates compiled by Thomson Reuters, Freeport has a mean one-year price target of $15.42, representing a 7.6% upside over its closing price on October 6.

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Underperformance

Freeport-McMoRan has been a relative underperformer in the copper mining space this year. Based on its October 6 closing prices, Freeport has gained 8.6% this year. By contrast, Glencore (GLEN-L) and Southern Copper (SCCO) have gained 33.2% and 30.4%, respectively, so far this year.

Copper miners (XLB) in general and Freeport stock have underperformed copper prices, which have gained 21.1% so far this year on the London Metals Exchange.

Grasberg

Freeport’s underperformance and its high percentage of “hold” recommendations could be due to its ongoing impasse at the Grasberg mine. FCX and Indonesia have been involved in long, often bitter discussions over the past few years.

Although FCX announced a framework with the Indonesian government in August 2017 that would help it secure mining rights beyond 2021, the framework left markets asking for more. (In Market Realist’s series Freeport-McMoRan Investors: Hold the Celebration, you can read about why.)

Analysts might wait on the sidelines until we can get more clarity on Freeport’s terms with the Indonesian government.

In the next part, we’ll discuss how analysts are rating Antofagasta (ANTO).

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