Freeport-McMoRan Corporation New York Stock Exchange: FXX Shares of the stock fell nearly 4% (3.96%) after the company released its fourth-quarter and full-year 2024 earnings report on January 23. The stock pulled away from session lows in midday trading, but is still hovering around its 52-week low. .
One of the reasons for the stock’s decline is that the mining company recorded a decline in its revenues year-on-year. The $5.72 billion the company made was down from the $5.9 billion it made in the same quarter in 2023. GAAP earnings also beat analysts’ expectations and were lower year over year.
However, with the improvement in earnings and non-GAAP production volumes, a sell-off may have begun. Heading into earnings, Freeport-McMoran analyst forecasts on MarketBeat showed that several analysts lowered their price targets or even downgraded the stock in January. 2025.
FCX stock has moved up and down along with the copper price. In fact, the similarities between the two charts are uncanny. The long-term outlook for copper demand remains strong. But does this mean this is a good time to buy FCX shares?
Uncertainty drives short-term sentiment
Investors have heard enough about tariffs in the past few months to last a lifetime. Now that President Trump is in the White House, the administration’s tariff plans are beginning to take shape.
As part of President Trump’s initial wave of executive orders, the administration plans to impose 25% copper tariffs on Canadian and Mexican copper starting February 1. Although Freeport-McMoRan does not have mining operations in those countries, it could be affected if Canada and Mexico impose retaliatory tariffs on imported copper.
Another concern is the potential slowdown in the Chinese economy. Increased demand for copper due to increased government stimulus measures lifted Freeport’s non-GAAP earnings in the quarter. However, there are concerns about a slowdown in the Chinese economy, which could negatively impact demand for copper.
The company is also locked in a dispute with the Indonesian government over its ability to export copper concentrates. Freeport’s license expired in December, and some analysts express concern about the company’s ability to get an extension. The delay will result in production and sales reductions in the current quarter.
As if that wasn’t enough, investors also need to consider the rise in the US dollar. The spot price of commodities, such as gold and copper, has an inverse relationship with the dollar, so when it rises, the spot price of the metals falls.
There’s still a lot to like about Freeport Basics
Despite missing the top line, Freeport-McMoRan noted that copper and gold sales came in above the company’s October 2024 guidance. Unit net cash costs were also below October guidance.
It’s also important to remember that prior to the report, FCX stock was up 5.7% in the first two weeks of the new year. The enthusiasm for the company’s stock is due to the expected demand for copper. Freeport-McMoRan is a leading copper mining company and provides investors with a stable balance sheet and abundant production.
Let copper be your guide with FCX stocks
Investors have a very tall wall of anxiety to climb before they want to invest in FCX stock. However, all concerns are short-term and do not impact the long-term outlook for copper, which will be needed to meet growing demand for new energy and energy applications.
Freeport-McMoRan has strong fundamentals. In the fourth quarter, the company reported full-year copper and gold production volumes that exceeded sales volumes, and increased its production forecasts for both copper and gold.
the Analysts’ expectations MarketBeat We have a consensus price target of $52.42, a 32% upside to the stock price after the earnings decline. This price is supported by an expected 27.9% growth in earnings per share (EPS) in the next 12 months.
However, for those who place a value on price-to-earnings numbers, you’ll pay a premium for FCX shares that trade at around 25 times earnings. Sector average for Inventory of basic materials About 19x earnings.
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