Freeport-McMoRan: Upside Mostly Baked In, Downgrade To Hold

Core Thesis - The investment thesis for Freeport-McMoRan (FCX) remains strong due to the long-term electrification trend, with expectations for higher revenues and dividends as copper prices rise [1][2]. Company Performance - FCX has experienced an 11.3% rally, outperforming the market's 3.2% increase, largely due to the Panama mine closure leading to perceived supply tightness [1]. - In FQ1'24, FCX reported a realized copper price of $3.94 per pound, a 3.4$2.73 [1]. - The company's revenues for FQ1'24 reached $6.32 billion, reflecting a 7.1$4.50 per pound, a 14.2% increase YoY and a 73% increase from the 2019 average of $2.60, indicating strong market conditions for FCX [2]. - Projections suggest that copper prices may remain elevated due to ongoing demand from electrification in automotive and renewable energy sectors [3]. Future Outlook - FCX management anticipates over$13 billion in adjusted EBITDA and $9 billion in operating cash flow for FY2024, supported by high copper prices [3]. - The demand for copper is expected to surge significantly, with forecasts indicating an 11x increase in the transport sector and a 4.8x increase in global electricity grids by 2050 [3]. Dividend and Stock Performance - FCX's stock has rallied by 34.3$0.30 per share annually, which may not see significant increases in the near term [7].