Freeport Stock Rises 35% in 3 Months: What's Driving the Rally?

Freeport-McMoRan Inc. FCX shares have gained 35.3% over the past three months. The company has also outperformed the Zacks Mining-Non Ferrous industry’s 25.9% rise and the S&P 500’s roughly 4.7% increase over the same period.

Surge in Copper Prices and Grasberg Progress Drive Upside

Freeport’s top line has been benefiting from record-high copper prices, as the majority of its revenues come from copper. In the last reported quarter, Freeport reported an increase of 38 cents in ARP for copper compared to the previous year period.

A tight global market and supply chain bottlenecks are resulting in the metal’s rally.

The demand for copper is supported by technology and energy transitions in various sectors. The automotive electrification is expected to be a significant growth driver for copper as electric vehicles consume more copper. Freeport anticipates strong potential for the EV market and expects rapid growth over the next decade. The economic situation in China further strengthens copper’s outlook, with electric vehicles and alternative energy generation increasing.

The Grasberg operational challenges put a pause on the delivery obligations. This put pressure on its supply and further favored copper prices.

Meanwhile, the company is planning to restart operations and ramp up underground production at Grasberg in Indonesia, increasing milling rates. It is on track with its smelter projects in Indonesia. Freeport substantially completed the construction of the new greenfield smelter in Eastern Java during 2024, with an expected full ramp-up by the end of 2025. The company is also developing the Kucing Liar ore body within the Grasberg district with a targeted commencement of production by 2030.

Freeport-McMoRan Inc. Price, Consensus and EPS Surprise

Freeport-McMoRan Inc. price-consensus-eps-surprise-chart | Freeport-McMoRan Inc. Quote

FCX’s Zacks Rank & Key Picks

FCX currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Basic Materials space are Kinross Gold Corporation KGC, Fortuna Mining Corp. FSM and Equinox Gold Corp. EQX.

At present, KGC sports a Zacks Rank #1 (Strong Buy), while FSM and EQX carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for KGC’s current-year earnings is pegged at $1.67 per share, indicating a rise of 145.59%. Its earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing once, with an average surprise of 17.37%. KGC’s shares have gained 223.9% over the past year.

The Zacks Consensus Estimate for FSM’s current fiscal-year earnings is pinned at 76 cents per share, indicating a 65.22% year-over-year increase. Its shares have surged 145.6% over the past year.

The Zacks Consensus Estimate for EQX’s current-year earnings stands at 54 cents per share, implying a 170% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, with the average earnings surprise of 87%.

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This article originally published on Zacks Investment Research (zacks.com).

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