The shares of Freeport-McMoRan Inc (NYSE:FCX) are down 1.1% to trade at $9.71, ahead of tomorrow's before-the-open third-quarter earnings report. Credit Suisse already came in with a price target cut to $11 from $13 and slashed its Q3 EBITDA estimate to $610 million, and the analyst predicted that the broader metals and mining sector will struggle through earnings season.
The stock, which just hit a four-year bottom of $8.43 on Oct. 9, has been struggling on the charts of late, chopping lower, with several recent run-ups thwarted by historically bearish pressure at its 80-day moving average. In fact, yesterday's one-month peak was stopped dead in its tracks by the trendline.
This could have some negative effects, according to Schaeffer's Quantitative Research Analyst Rocky White, whose data shows this signal emerging seven other times during the past couple years. FCX was higher one month later after just 14% of these signals, averaging an 8.02% drop. A similar move would put the equity back below the $9 region, just north of its aforementioned low.
Looking back at the past two years' worth of post-earnings moves, FCX has been higher after only two of its past eight reports. What's more, Freeport-McMoRan has suffered two dramatic next-day dips over 13% during this time, averaging a swing of 6.7%. This time around, the options pits are pricing in a slightly bigger swing at 8.9%.
While overall options volume today is relatively light today, during the past two weeks, options bears have begun to pile on. FCX sports a 10-day put/call volume ratio of 0.43 on the the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 91% of all other readings from the last year, suggesting a much healthier appetite for puts of late.
Analysts on the other hand, are split, which could help push FCX even lower, should some of these brokers follow Credit Suisse's bearish lead. Right now, six call the equity a "strong buy," and six say "hold," with not a single "sell" to be seen. Plus, the 12-month consensus target price of $12.45 is at a solid 28% premium to current levels, leaving the stock ripe for a round of downgrades.