Freeport-McMoRan (FCX) posted Q4 earnings that topped Wall Street estimates, but fell vs. a year ago amid lower copper prices and higher costs. FCX stock rose in Wednesday’s stock market action.
Freeport booked an average copper price of $3.78 a pound in Q4, down from $4.41 a year earlier. On Wednesday, copper futures dipped 2.5 cents to $4.21 a pound, holding near their highest level since May.
Copper prices have surged on demand expectations as China’s economy reopens and odds improve that Europe and the U.S. will avoid recession this year. Longer term, Freeport expects widespread copper supply deficits as new demand fueled by the green energy transition outstrips the capacity of mining projects currently in development. The mining investment needed to close that gap will require higher copper prices, Freeport said.
Estimates: FCX earnings were expected to fall 53% from a year ago to 45 cents a share. Revenue was seen slipping 12% to $5.4 billion.
Results: Adjusted EPS fell 46% to 52 cents, as revenue declined 6.6% to $5. 76 billion.
Outlook: Freeport management now anticipates 2023 copper sales of 4.2 million pounds in 2023, flat vs. 2022. Expected gold sales of 1.7 million ounces would trail 1.8 million ounces in 2022. Unit cash costs are seen rising to $1.60 per pound of copper vs. $1.53 in Q4 and $1.50 for all of 2022.
FCX stock rose 2.2% to 45.58 intraday Wednesday, on track for the best close in nine months. On Tuesday, FCX stock slipped 0.8% to 44.59. FCX stock broke out from a cup-with-handle base pattern on Nov. 30, clearing a 39.26 buy point. After trading in a narrow range for four weeks, it broke higher again on Jan. 6.
FCX stock is now a bit extended from its official buy point and its 50-day moving average. A longer period of basing or retreat to its 50-day line might put it back in play.
It’s possible that FCX stock will forge a three-weeks-tight, which could be used as a quasi-handle in a deep, 10-month consolidation.
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