FBR Remains Sidelined on Freeport-McMoRan Inc (FCX)

In a research report released today, FBR analyst Lucas Pipes reiterated a Market Perform rating on shares of Freeport-McMoRan Inc (NYSE:FCX) with a price target of $11, following the company’s second-quarter release on July 26. The mining firm reported a slight miss on adjusted EPS of $(0.02) compared to consensus estimates of $(0.01). FCX stock is currently trading flat at $12.93.

Pipes wrote, “For many investors, the company’s soft results and 2016 guidance update took a backseat to the company’s strategic considerations that following its announced $1.5B equity raise, “there is no requirement to sell further assets. There is no requirement to sell further equity.” The company stated it would focus on “nonequity capital markets transactions” moving forward. Freeport also unveiled a debt target of $10B by 2017-end, not including its proposed divestment of 20% interest in PT-FI. We support this strategic direction but remain on the sidelines given the persistent uncertainties in Indonesia and O&G. The company referred to “trigger dates” on August 8 and January 2017 that could force them to pull back on capital spending in Indonesia, the implications of which may not be fully priced into the stock at this time.”

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Lucas Pipes has a yearly average return of -2.7% and a 42.5% success rate. Pipes has a -44% average return when recommending FCX, and is ranked #3398 out of 4087 analysts.

Out of the 15 analysts polled by TipRanks, 3 rate Freeport-McMoRan Copper & Gold stock a Buy, 10 rate the stock a Hold and 2 recommend Sell. With a downside potential of 26.3%, the stock’s consensus target price stands at $9.56.

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