FREEPORT STOCK
SURGES ON HIGHER COPPER PRICES (FCX)
Shares of Freeport-McMoRan Inc. (FCX) rose as much
as 7% Tuesday, reaching a session high of $12.16, driven by higher copper
prices.
On Tuesday, the price of copper rose to a 52-week
high, gaining 3.1% to $2.3790 per pound. Higher copper prices mean potentially
higher profits for Freeport. The Arizona-based natural resources company has
seen its shares rise 10% in the past five trading days, while climbing almost
20% in the past month.
Investors continue to applaud the manner in which
Freeport is working to cut costs to meet its targets for both debt reduction
and earnings growth. The fact that copper prices continue to rise now adds to
the appeal in Freeport. Copper prices have rallied some 13% between Oct. 24 and
Nov. 8. And that's even with data showing a 15% decline in copper imports in
China.
In a research note Tuesday, Citigroup analysts
explained that, "Better than expected demand, driven by Chinese
construction and infrastructure spending, was widely regarded as the saving
grace for copper. Chinese 2016 demand estimates now range between 5-7%
compared with 0-3% projections at the start of this year."
The rising copper prices have surprised investors,
especially on the heels of several consecutive years of falling prices. In the
case of Freeport, after third quarter fiscal 2016 earnings results beat on the
top line but missed on profit estimates, its outlook has suddenly become
brighter. The company continues to benefit from strong copper production, as
copper sales grew to 1.23 billion pounds in the third quarter, rising from 1
billion pounds in the year-ago quarter.
Looking ahead, Freeport is expected to post earnings
per share of 23 cents on revenue of $4.15 billion in the quarter that ends
December. The company forecasts copper sales of about 4.8 billion pounds, which
is down from the prior forecast of 1.7 million pounds. But given the rate at
which prices continue to climb, Freeport can still realize higher revenue on
lower copper production.
Freeport shares closed Tuesday at $12.09, up 7.09%.
The shares have risen 78% year to date, besting a 4.7% rise in the S&P 500
(SPX) index.
Source :
http://www.investopedia.com/news/freeport-stock-surges-higher-copper-prices-fcx/
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