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Did Wall Street Get It Wrong about Freeport-McMoRan?

How Are Analysts Rating Copper Producers ahead of 1Q16 Earnings?

(Continued from Prior Part)

Wall Street estimates

According to consensus estimates compiled by Bloomberg, Freeport-McMoRan (FCX) has a one-year price target of $8.63, which represents a 20% downside over its April 15 closing prices. Out of the 20 analysts surveyed by Bloomberg, only four rate the stock as a “buy.” The remaining analysts rate the stock as a “hold” after its recent run-up. Let’s now look at some of the recent analyst recommendations for FCX.

Recommendation changes

The graph above shows the recent analyst recommendations for Freeport. In the last month, all analysts have maintained their ratings on Freeport-McMoRan. Only UBS downgraded Freeport to a hold with a target price of $9. BMO Capital Markets has set a price target of $12 for Freeport with a “market perform” rating. FBR Capital Markets is among those placing bearish bets on Freeport with a one-year price target of $3.

What changed for Freeport?

Wall Street was bearish on Freeport and other copper producers in the beginning of the year. However, a combination of rising commodity prices (GSG) and improved “risk-on” sentiment has boosted miners like BHP Billiton (BHP) and Rio Tinto (RIO).

Freeport’s action on the asset sales front only provided fodder to Freeport bulls. You can read How the Morenci Deal Changed Freeport-McMoRan’s Future to explore the different factors that changed Wall Street’s perception about Freeport-McMoRan.

Meanwhile, it’s not only Freeport that has surprised analysts with its price action. Teck Resources (TCK) has also seen a sharp upward movement this year. In the next part of the series, we’ll explore how Wall Street is rating Teck Resources after its spectacular rally.

Continue to Next Part

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