This report is an updated version of the report published on 1^st November 2022 at 12:54 PM PT

Freeport-McMoRan, Inc.

FCX Details

Freeport-McMoRan, Inc. (NYSE: FCX) is a global mining company amongst the largest publicly traded copper producers. The company operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum.

Financial Results for 3QFY22

• The company delivered sales of 1.1 billion pounds of copper, 480 thousand ounces of gold and 17 million pounds of molybdenum during the quarter.
• The company has reported net income attributable to common stock of USD404 million, USD0.28 per share
• It generated operating cash flows of USD0.8 billion (net of USD0.3 billion of working capital and other uses) in 3QFY22
• As on September 30, 2022, FCX’s consolidated debt stood at USD10.7 billion, and consolidated cash and cash equivalents totalled USD8.6 billion

Key Updates

• On 26 September 2022, the company released its updated Climate Report, which focuses on its prevailing moves to lower its greenhouse gas (GHG) emissions, improve energy efficiency, evaluate and integrate the use of lower carbon and renewable energy sources and improves its flexibility to future climate-related risks
• On 21 September 2022, the company’s board of directors has declared cash dividends of USD0.15 per share on FCX’s common stock.

Outlook

The company expects operating cash flows in FY22 to be around USD4.7 billion (net of USD1.4 billion working capital and other uses). It estimates to incur capital expenditures of approximately USD3.6 billion (USD2.7 billion excluding the Indonesia smelter projects, including USD1.8 billion for major mining projects) in FY22.

Key Risks

The company’s business is exposed to operational risks with higher inherent risks in underground mining, fluctuations in price and availability of commodities purchased, challenges in supply, logistics and transportation services, and changes in mine plans, among others.

Valuation Methodology: EV/Sales Based Relative Valuation (Illustrative)

Stock Recommendation

Over the last one year, the stock has declined ~14.19%. The stock is trading below the average price of 52-week low-high range for the stock at USD24.81-USD51.99, respectively.

The stock has been valued using EV/Sales multiple-based illustrative relative valuation, and the target price so arrived reflects a fall of low double-digit (in % terms). A slight discount has been applied to EV/Sales Multiple (NTM) (Peer Average), considering the challenging cost and supply chain environment.

Considering the resistance and target level achievement, current trading levels and risks associated, it is prudent to liquidate at the current levels.

Hence, a ‘Sell’ rating has been provided on the stock at the current market price of USD 33.66 (as of 01 November 2022, at 7:10 AM PDT).

Technical Overview:

Daily Price Chart

Freeport-McMoRan Inc (FCX) is a part of Kalkine’s Global Fully Charged Product.

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.