Analysts Aren’t Impressed with Freeport-McMoRan’s Outlook




Freeport-McMoRan (FCX) released its second-quarter earnings on July 25. The company posted revenues of $5.17 billion in the second quarter—compared to $3.71 billion in the second quarter of 2017 and $4.86 billion in the first quarter. Freeport-McMoRan’s second-quarter revenues were better than expected. The company posted an adjusted EBITDA of $2.1 billion in the second quarter—compared to $1.92 billion in the first quarter and $1.2 billion in the second quarter of 2017. Freeport-McMoRan’s second-quarter EBITDA also beat analysts’ estimates.

Despite posting better-than-expected earnings, Freeport-McMoRan saw selling pressure after it released its second-quarter earnings. Read How Q2 2018 Worked Out for Freeport-McMoRan for a detailed analysis of the company’s second-quarter earnings.

Analysts’ ratings

According to consensus estimates compiled by Thomson Reuters, Freeport-McMoRan has a mean one-year target price of $19.26, which represents 34.5% upside over its closing price on August 21. In contrast, the company carried a one-year target price of $19.64 on July 24—one day before its earnings release. Glencore (GLEN-L) and Southern Copper (SCCO) are trading 27.8% and 6.8%, respectively, below their consensus target prices.

Among the analysts polled by Thomas Reuters on August 21, Freeport-McMoRan received a “strong buy” rating from one analyst, seven analysts rated the stock as a “buy,” and 13 analysts rated the stock as a “hold.” Notably, Freeport-McMoRan has the highest percentage of “hold” recommendations among the copper miners (XME) that we’re covering in this series.

Analysts’ action

After Freeport-McMoRan’s second-quarter earnings, Deutsche Bank raised the stock from “sell” to “hold.” However, Jefferies lowered Freeport-McMoRan’s target price from $26 to $24 and maintained a “buy” rating.

Next, we’ll discuss Freeport-McMoRan’s outlook.

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