Following Freeport-McMoRan Inc’s (NYSE:FCX) second-quarter results highlighting efforts in debt reduction for the mining company, Berenberg analyst Fawzi Hanano reiterates a Hold rating, while slightly lowering the price target to $10.75. Hanano reasons that an improved debt position could likely offset any negative impact from lower earnings.

From Hanano’s standpoint, the analyst observes “a noticeably more upbeat management team,” as Freeport has been selling assets, like a 13% stake in Morenci and the Timok project, to try to take operational steps to conserve cash flow. For now, the short-term focus for Freeport focuses on making debt reduction a top priority. Freeport has raised its equity by $1.5 billion, raising the total equity issuance to $3.5 billion over the last year. Additionally, Freeport has lowered both gold and oil guidance for 2016 with a drop in gold earnings by about 11.9% and a downturn in oil earnings by 11.1%.

By year-end, Hanano sees increased debt reduction, hopefully falling under $1.4 billion, which will include the equity raise, the sale proceeds from stake in assets like Tenke, and bolstered cash flow stemming from Indonesia as a result of the Grasberg operation choosing to transition to significantly higher grades of copper and gold. The analyst believes the Grasberg efforts will carry through and anticipates that by the end of 2017, the net debt will fall down to $12.1 billion, which Hanano deems, “a solid improvement from current levels but still higher than the company’s USD10bn target.” Moreover, the analyst comments, “We forecast no net debt reduction in 2018 as we expect earnings and cash flow to fall significantly yoy on Grasberg’s mine plan.

Hanano asserts, “We believe that the equity raise provides management with breathing space in the interim and the company’s improved financial position reduces the likelihood of further asset sales being announced this year.” Especially with asset sales, the analyst thinks the proceeds will spring collateral and help satisfy the requirement expected June  30th.

Once raised limits will ease leverage and the requirement is satisfied, Hanano believes, “the pressure to sell more assets is significantly reduced compared to earlier this year. Conversely, we believe management would like to conserve Freeport’s asset portfolio as much as possible.”

As usual, we recommend taking analyst notes with a grain of salt. They are often successful in moving the stock price, but you always need to take things into perspective. According to TipRanks, Hanano is a two-star analyst. Hanano is ranked #2,759 out of 4,083 analysts, reaching a 50% success rate and averaging a loss of 1.7% in his yearly returns.

TipRanks analytics exhibit FCX is a Buy. Of 7 analysts who have offered recommendations in the last 3 months, 2 rate a Buy, but 5 maintain a Hold. The 12-month average price target stands at $12.64, marking a slight 1% upside from where the stock is currently trading.Screen Shot 08-02-16 at 08.55 PM

Read More: FBR Remains Sidelined on Freeport-McMoRan Inc (FCX) »