New Target Price for Freeport-McMoRan as Tariff News Boosts Copper Price
The mining firm has seen a boost from Wall Street as copper futures sore in 2025.
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On Thursday morning, I have seen front month copper futures trading around $5.10 per pound. That's up almost 27% year to date. Not bad at all for an economy that appears to be slowing down.
That's what happens when one mixes significantly increased demand for electricity (thanks to AI and data centers) with a supply chain that has been impacted by both labor strikes and a regulatory environment. Then add the possibility of increased tariffs on imported copper and voila! You have a sustained rally.
Caution to my friends who do have futures trading accounts but have never traded copper: Those futures are priced per pound, but one standard contract represents 25,000 pounds of copper and one micro contract still represents 2,500 pounds.
A Freeport Upgrade
On Thursday morning, JPMorgan analyst Bill Peterson upgraded Freeport-McMoRan FCX to overweight (buy-equivalent) from neutral (hold-equivalent), while taking his target price up to $52 from $48.
The stock closed on Wednesday at $40.42, up 1.46% for the day and up 7.3% year to date. Peterson wrote that, "tariff risk is likely to maintain premium pricing for the company's U.S.-based footprint for the foreseeable future."
Peterson also sees longer-term supply constraints as "supportive of a favorable through-cycle pricing environment for the entire industry."
Sounds great. Is there a catch? Hmm... TipRanks rates Peterson at little more than zero stars out of five as, over the past year, he has had a success rate on his calls of 35% and the average return on those calls is -10%. I don't report on these things to be mean or funny, but readership has a right to know. Peterson is ranked by TipRanks as the 9,088th best sell-side analyst of the 9,428 who they track.
Peterson acted today, but he's not way off when considering his peers. Earlier this week, Bob Brackett of Bernstein, who is rated at four stars by TipRanks, reiterated his "hold" rating on the stock and his $45 target price. Last week, Sam Crittenden of RBC Capital, who is rated at five stars by TipRanks, also reiterated his "hold" rating, while reducing his target price from $55 to $52.
No, a hold rating may not sound great, but his $52 target equals the new target that Peterson just set, and that target would be up almost 29% from Wednesday night's close. I don't know about you, but in my book, a potential 29% run is a buy, not a hold. Call me crazy, but I still see potential 29% gains as very attractive.
Freeport Earnings
Freeport is expected to report the firm's fiscal first quarter financial results on or about April 22.
Wall Street is looking for an adjusted EPS of $0.22 on revenue of $5.36 billion. That's really not so hot compared to the same period a year ago. For Q1 of last year, FCX posted an adjusted EPS of $0.32 on revenue of $6.32 billion. This would be a 15.2% contraction in sales. The consensus estimate of $0.22 for the quarter is down from about $0.39 at the start of the period. Then again, this is really all before tariffs kick in and much of it is before copper prices ran wild (up 11.2% in a month).
Freeport Stock Fundamentals
Cash flows have been strong. As of December 2024, on a trailing 12-month basis, FCX generated operating cash flow of $7.16 billion and free cash flow of $2.352 billion. Of that, $865 million was paid out to shareholders in the form of cash dividends.
The balance sheet is not in awful shape for a miner. At year's end, the firm sat on a cash position of $3.923 billion and inventories of $6.808 billion. The current ratio ran at a robust 2.42. Even the quick ratio was strong at 1.18, which is impressive given the size of those inventories.
The firm had almost no short-term debt on the books, but did have a long-term debt load of $8.907 billion, which will eventually have to be managed. To the firm's credit, that long-term debt load is down more than 11% from where it was two and a half years ago.
The Freeport Stock Chart
Readers will see that FCX has already broken out of a falling-wedge pattern, which is a pattern of bullish reversal. Readers will also see that the 21-day EMA has just crossed above the 50-day SMA in what some traders used to refer to as a "mini" or "swing traders" golden cross. Relative strength is steadily improving, which you'll see above the chart.
Below the chart, you'll see that all three components of the daily MACD are now above the zero bound now that the 26-day EMA has come over from the dark side. With the 12-day EMA running ahead of the 26-day EMA, this is a bullish posturing. This is a highly constructive chart. I am not in the name as of yet but am strongly considering an initiation.
Freeport- McMoRan (FCX)
Target Price: $52 (I'm not just copying Peterson and Crittenden, I swear)
Pivot: 200-day SMA (currently $43.50)
Add: Down to the 50-day SMA (currently $38)
Panic: Loss of that 50-day SMA
At the time of publication, Guilfoyle had no positions in any securities mentioned.
