Will This Upgrade Help Freeport-McMoRan (FCX) Stock Today?

NEW YORK (TheStreet) -- Freeport-McMoRan Copper & Gold Inc. (FCX) was upgraded to "outperform" from "neutral" by Macquarie on Thursday.

The firm increased their price target to $40 from $36.

Freeport-McMoRan is up 0.24% to $33.40 in early trading today.

"Two things make us more positive on FCX: a potential near-term bottom in copper price as China demand improves in the wire rod, cable and construction sector, and we have more confidence in a deal allowing FCX's Grasberg mine to resume exports." Macquarie said in the note.

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TheStreet Ratings team rates FREEPORT-MCMORAN COP&GOLD as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate FREEPORT-MCMORAN COP&GOLD (FCX) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 7.9%. Since the same quarter one year prior, revenues rose by 30.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for FREEPORT-MCMORAN COP&GOLD is rather high; currently it is at 50.50%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 12.01% trails the industry average.
  • In its most recent trading session, FCX has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has decreased by 4.8% when compared to the same quarter one year ago, dropping from $743.00 million to $707.00 million.
  • You can view the full analysis from the report here: FCX Ratings Report
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