NEW YORK (TheStreet) -- Freeport-McMoRan (FCX) shares are down 0.6% to $33.05 in pre-market trading on Thursday after Credit Suisse (CS) downgraded the stock to "neutral" from "outperform" and lowered its price target to $37 from $45.
Credit Suisse praised the mining company for its commodity-diverse portfolio while noting some of the challenges that caused the firm to lower its outlook.
"Its 2012 Oil & Gas acquisitions were justified on the basis that the Copper and Oil & Gas 'silos' would remain financially independent and self-financing," the firm said. "Aggressive balance sheet deleveraging targets were also set ($12bn net debt in 2016). Recent commodity price weakness may challenge this commitment. FCX is also moving to bulk underground mining methods, which increase the level of technical operations risk in the medium term."STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
Separately, TheStreet Ratings team rates FREEPORT-MCMORAN INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate FREEPORT-MCMORAN INC (FCX) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 0.6%. Since the same quarter one year prior, revenues rose by 28.8%. 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.
- Net operating cash flow has increased to $1,386.00 million or 34.04% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -10.34%.
- 43.73% is the gross profit margin for FREEPORT-MCMORAN INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 8.72% trails the industry average.
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Metals & Mining industry average. The net income has remained constant at $482.00 million when compared to the same quarter one year ago.
- FCX's debt-to-equity ratio of 0.95 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that FCX's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.56 is low and demonstrates weak liquidity.
- You can view the full analysis from the report here: FCX Ratings Report