On Thursday, Citi maintained its neutral stance on the shares of mining giant Freeport-McMoRan (NYSE:FCX), with a steady stock price target of $46.00. The firm's analyst highlighted the recent update to the company's financial model, which now includes revised copper price forecasts provided by Citi's global commodity team.
Freeport-McMoRan's first-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) are projected to be $2.2 billion. The firm anticipates no significant developments in the upcoming results.
Still, attention is drawn to the company's efforts to secure an export license for Grasberg concentrates starting in May, as the newly built smelter is expected to gradually increase its operations. Although delays are seen as a possibility, they are expected to be resolved, which would otherwise tighten global concentrate supplies.
Citi has adjusted its expectations for Freeport-McMoRan's future earnings based on the updated copper price estimates. For the year 2024, the copper price forecast has been increased by 11% to $9,125 per ton, up from the previous $8,200 estimate. Consequently, the firm has raised its 2024 EBITDA estimate for Freeport-McMoRan by 28% to $9.9 billion.
Conversely, the copper price forecast for 2025 has been lowered by 12% to $10,500 per ton from the earlier $12,000 projection, leading to a 14% reduction in the 2025 EBITDA estimate to $10.8 billion.
The current stock price of Freeport-McMoRan is believed to reflect a long-term copper price of approximately $12,000 per ton, aligning with Citi's forecast for the year 2026. This assessment suggests that the market's expectations are consistent with the firm's long-term projections for the copper industry.
InvestingPro Insights
In light of Citi's neutral stance on Freeport-McMoRan, current metrics from InvestingPro provide a broader perspective on the company's financial health and market position. With a market capitalization of $72.44 billion and a trailing twelve-month P/E ratio of 39.38, Freeport-McMoRan is trading at a high earnings multiple, which could indicate that the stock is priced optimistically relative to its earnings.
The company's price to book ratio as of the last twelve months stands at 4.34, further underscoring its premium valuation in the market.
InvestingPro Tips reveal that Freeport-McMoRan is a prominent player in the Metals & Mining industry, yet analysts have revised their earnings expectations downwards for the upcoming period. Despite this, the company's cash flows can sufficiently cover interest payments, and its liquid assets exceed short-term obligations, indicating a solid financial footing.
Moreover, Freeport-McMoRan operates with a moderate level of debt and has shown a strong return over the last three months, with a total price return of 30.77%. This performance, along with the stock trading near its 52-week high, suggests investor confidence in the company's prospects.
For those interested in a deeper analysis, there are additional InvestingPro Tips available that could provide further insights into Freeport-McMoRan's financials and market performance. To access these tips and more, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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