8 Dec

Analysts Stay on Sidelines amid Pending Indonesia Deal

WRITTEN BY Mohit Oberoi, CFA

Indonesia deal

In this part of the series, we’ll see how analysts are rating Freeport-McMoRan (FCX). According to the consensus estimates compiled by Thomson Reuters, Freeport has a mean one-year price target of $16.23, which represents a 13.2% upside over its closing price on December 6. Freeport has received a “hold” recommendation from 48% of analysts polled by Thomson Reuters on December 6. About 28% of analysts rate the stock a “buy,” while the remaining analysts rate the stock a “sell” or some equivalent.

Analysts Stay on Sidelines amid Pending Indonesia Deal

Miners (FM) Glencore (GLEN-L) and Southern Copper (SCCO) have a “buy” or higher rating from 64% and 15% of analysts, respectively. Antofagasta (ANTO) has received a “buy” rating from 21% of analysts polled by Thomson Reuters on December 6.

Citi raised Freeport’s target price from $15 to $16 on December 5. Overall, analysts have been on the sidelines amid the company’s ongoing negotiations with the Indonesian government. Although there have been some customary target price changes after Freeport’s quarterly earnings release, analyst action has been muted at best.

Grasberg

Freeport and Indonesia are discussing the terms to extend Freeport’s license in Indonesia beyond 2021. In August, Freeport announced a framework with the Indonesian government under which the company agreed to sell its 51% stake in its Indonesia operations toward Indonesian interests. It also agreed to construct a smelter in the country, thereby agreeing to two of the key demands from the Indonesian government. However, the two sides are still discussing the price and the timing of the divestment. The divestment pricing can have an impact on Freeport’s valuation as well. You can read The Answer to Freeport-McMoRan’s Valuation Could Lie with Indonesia to find out more about Freeport’s valuation.

In the next part, we’ll see how the markets are rating Glencore.

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