Berenberg Downgrades Freeport-McMoRan (FCX) to Sell; Risks Skewed to the Downside
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Berenberg downgraded Freeport-McMoRan (NYSE: FCX) from Hold to Sell with a price target of $10.90, saying risk is skewed to the downside.
Analyst Fawzi Hanano commented, "We believe near-term risks are skewed to the downside, relating to Grasberg’s production and our expectations of a correction in the copper price from current levels. We also expect investors to start looking past a 2017E earnings peak to a more sustainable level in later years and to value the company on that basis. The stock’s 7.7x 12M forward EV/EBITDA is already rich, in our opinion, and we see this moving towards 10x in 2018E. We raise our price target to USD10.90, reflecting our revised commodity price estimates. However, we downgrade our rating to Sell, as our price target implies 32% downside."
Shares of Freeport-McMoRan closed at $14.97 yesterday.
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