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Could Freeport-McMoRan’s Rally Lose Steam?

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Jan. 23 2019, Updated 7:31 a.m. ET

Freeport-McMoRan’s rally

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Recent action

Some brokerages have lowered their target price for Freeport this year: Goldman Sachs lowered it from $18 to $16 and Clarksons Platou Securities lowered it from $14 to $13 on January 15, and Raymond James lowered it from $16 to $14.50 on January 18.

Previously, we noted that Freeport seems to offer a good entry point. However, with its recent rally, the margin of safety has been reduced. Furthermore, Indonesia’s (EIDO) general elections this year could bring increased political posturing in the country, whose government has slapped Freeport with billions of dollars in environmental claims.

While Freeport stock could rise slightly, the risk-reward equation looks largely balanced. With the company’s production levels expected to fall and China’s slowdown, the upcoming transition years could bring additional challenges for Freeport. 

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