Despite the massive debt burden, Freeport-McMoran’s (FCX) has outperformed the market year-to-date (YTD)
Freeport-McMoran Inc (NYSE:FCX) stock has gained 42.47% of market value year-to-date (YTD) as of March 11. Most of the gain was witnessed in February as the prices of gold and copper hiked. Moreover, the company has outperformed the market as Dow Jones and S&P 500 index are down 1.46% and 1.56% YTD, respectively. However, the company’s stock is showing a slightly downward trend in today’s trading session as Morningstar Inc. gave a CCC rating for the company, which suggests a very high default risk.
Freeport-McMoran’s commodity business is not a point of concern for the company or investors, but the oil and gas exploration business is. The company acquired the exploration business in 2013, financing it through debt. However, the company realized its mistake within a year of acquisition as the oil price plummet led to increased cost of operations. The exploration business has overshadowed the profitable performance of mining business. However, Freeport-McMoran’s management is trying to get rid of the exploration business by selling it off but hasn’t found any interested buyer yet.
Freeport-McMoran deals in the commodity sector and therefore its performance is directly related to commodities’ prices and demand. The recent hike in commodities’ prices was beneficial for every miner but it double benefited Freeport-McMoran as the company needed it the most in times of debt burden and revenue squeeze. However, the increase in commodity prices couldn’t satisfy the overall market due to its volatile nature but most of the analysts are optimistic about the company’s future performance.
As per FactSet, out of 17 brokerage firms covering Freeport-McMoran stock, 11 have recommended a Hold while six suggest a Buy. On March 08, Freeport-McMoran rating was upgraded by Vetr analysts to a Buy from a Hold with a $9.54 12-month price target. Conversely, Citigroup Inc. analysts reaffirmed a Sell rating the same day. Freeport-McMoran stock has a $7.36 12-month price target suggested by Zacks Research.
The company’s stock has a 52-week range of $3.52-23.97 and is currently trading at $9.67 as of 11:24AM EST on March 11.