UPDATE: JPMorgan Assumes Freeport-McMoRan (FCX) at Overweight
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JPMorgan analyst Michael Glick assumes coverage on Freeport-McMoRan (NYSE: FCX) with a Overweight rating and a price target of $37.00 (from $20.00).
The analyst comments "This year, Freeport should see a significant increase in copper and gold volumes, in addition to ramping volumes at Lone Star and the restoration of mining and milling operations at Chino in North America. As major project capex declines in 22+ (and in 2024+ in particular), we model a major inflection in the company's excess cash flows. In addition, as the largest pure-play copper name, Freeport is poised to benefit in the event copper demand accelerates at a greater-than-expected pace given faster penetration rate of electric vehicles, renewables and the associated infrastructure globally. The company recently announced a performance-based payout structure whereby it will target returning 50% of available cash flows to shareholders. Our analysis suggests the company could pay out $2.2 and $2.8 billion in 2022 and 2023, respectively. From a valuation perspective, we utilize a bottom-up net asset value calculation blended with a 6x EBITDA multiple to get to a price target of $37/sh. We note
that our NAV calculation is based on a mine-by-mine DCF at the current strip."
Shares of Freeport-McMoRan closed at $32.02 yesterday.
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