Why Freeport-McMoRan Is More Than A Good Copper Bet [Seeking Alpha]

Freeport-McMoRan Copper & Gold Inc. (FCX) is a leading international mining company, operating large, long-lived, geographically diverse assets with strong reserves of copper, gold and molybdenum. FCX was upgraded recently by analysts. Recent developments will be updated for FCX. By comparing to another major copper player, Southern Copper Corp (SCCO), and copper price, FCX is shown to be more than a good copper bet.

Dividend

On March 27, 2013, FCX declared a cash dividend of $0.3125 per share payable on May 1, 2013 to holders of record as of April 15, 2013.

M&A

In late March, FCX completed the transaction for 56% interest of a large scale cobalt chemical refinery located in Kokkola, Finland. FCX will be the operating for this new joint venture, named Freeport Cobalt. As reported,

“The acquisition enhances FCXs cobalt marketing position, product portfolio and product development capabilities and provides direct end-market access for the cobalt hydroxide production at Tenke.”

Analysts Calls and Estimates

On April 5, 2013, FBR Capital initiated coverage on FCX with an outperform rating and a price target of $41. The analyst, Mitesh B. Thakkar, said,

“We are launching coverage of copper producers with a cautious near‐term outlook but believe that long‐term fundamentals will continue to support copper prices around $3/lb. In the near term, we believe that copper prices could remain under pressure due to a choppy demand outlook, inventory overhang, and impending supply growth. Longer term, however, we believe that prices will remain supported above the marginal cost and should provide incentives for needed supply growth.”

Analysts currently have a mean target price of $40.00 for FCX. Analysts, on average, are expecting an EPS of $0.82 with revenue of $4.78B for the current quarter ending in March, 2013. For 2013, analysts are projecting an EPS of $4.38 with revenue of $21.39B, which is 18.80% higher than 2012. FCX is expected to release its Q1, 2013 earnings on April 15, 2013. In the last 4 quarters, FCX had 3 positive earnings surprises and 1 negative surprise.

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