NEW YORK (AP) â¿¿ Shares of Freeport-McMoRan Copper & Gold Inc. are continuing their downward slide Thursday on a raft of downgrades after the company announced plans to buy a pair of oil and gas producers for $9 billion.
Goldman Sachs, Deutsche Bank, RBC, Goldman, Citi, Macquarie and BMO all cut expectations.
Brian Yu of Citi also cut his price target on the stock to $35 from $46 after the Phoenix company said it is paying $6.9 billion in cash and stock for Plains Exploration & Production Co. and $2.1 billion for McMoRan Exploration Co. It will assume $11 billion in debt.
The deal will create a natural resources conglomerate with assets ranging from oil rigs in the Gulf of Mexico to a huge copper mine in Indonesia.Yu maintained his earnings estimates on the stock because the deal is still subject to a shareholder vote and isn't expected to close before the spring of next year. But he warns that Freeport's shares, after losing 16 percent on Wednesday, may continue to trade lower because of the massive amount of debt the company will take on, possible impacts on earnings and investor pushback. The analyst said he would have put a "Sell" rating on the stock if not for two factors: Most of Freeport's earnings will still be derived from mining, and any doubts about the success of the deal are likely to drive a sharp uptick in the stock. The stock may be headed for a year-low on Thursday. It's down 79 cents, or 2.5 percent, to $31.37 before the opening bell. Its 52-week low is $31.08.