Scotiabank has nudged up its 12-month price target on Freeport-McMoRan (NYSE:FCX) to $72 from $70 while continuing to rate the stock Sector Outperform. The bank highlighted the implications of a recently announced memorandum of understanding between Freeport-McMoRan and the Indonesian government covering the life-of-resource extension for the Grasberg minerals district.
The shares are trading at $62.57, reflecting a market capitalization of $89.93 billion, and have returned 62.83% over the past year.
Details of the Grasberg arrangement
Under the memorandum of understanding, Freeport-McMoRan agreed to cede an incremental 12% ownership stake in the Grasberg asset at no cost after 2041. That change will reduce the company’s interest from 48.8% to 36.8% beginning after 2041, while the current license remains scheduled to expire in 2041 - a date that precedes the projected exhaustion of mineral resources at the site.
The agreement specifies no operational changes during the interim period up to 2041. It also provides that Freeport-McMoRan will be reimbursed on a pro rata basis for investments that confer benefits in the post-2041 timeframe.
Valuation and analyst reaction
Scotiabank said the MOU contributes roughly 8% accretion to its net asset value per share estimate and reduces the long-term risk profile for Grasberg. The firm characterized the update as positive for Freeport-McMoRan shares.
The revised 12-month target from Scotiabank is derived from an equal-weighted blend: 50% based on 8.5 times the average 2027-2028 enterprise value to EBITDA multiple and 50% based on 2.0 times the updated net asset value per share estimate.
Scotiabank’s Sector Outperform rating rests on an improving free cash flow outlook, what the bank sees as attractive relative valuation as Grasberg recovers, and the company’s high leverage to copper and gold prices.
Other analyst actions and market context
Separately, Argus upgraded Freeport-McMoRan’s rating from Hold to Buy, pointing to a strengthened balance sheet and potential upside from elevated copper prices. Morgan Stanley also raised a price target on the stock to $70 while keeping an Overweight rating, citing expected benefits from Section 232 copper tariffs.
The company’s developments came amid a broader rally in the copper market, with copper prices reaching a record above $14,000 per metric ton. That move was attributed in market commentary to speculative buying and strong demand expectations.
At the same time, Freeport-McMoRan experienced pressure when media coverage indicated the Trump administration was considering rolling back tariffs on steel and aluminum; that news corresponded with a 1.5% decline in the company’s stock.
Implications
Analysts who revised ratings and targets point to a combination of valuation support, balance sheet improvement, and commodity exposure as drivers of their views. The Grasberg MOU, by clarifying post-2041 ownership and providing for reimbursement of applicable investments, has been interpreted by Scotiabank as lowering long-term operational risk and adding to NAV per share estimates.
InvestingPro analysis, cited in commentary, assigns Freeport-McMoRan a "GOOD" financial health score, noting the company is trading above its Fair Value estimate.
Summary
Scotiabank raised its price target on Freeport-McMoRan to $72 and maintained a Sector Outperform rating after the company agreed a memorandum of understanding with the Indonesian government that changes post-2041 ownership of the Grasberg minerals district. The deal trims Freeport-McMoRan’s stake in the asset after 2041 to 36.8% from 48.8%, provides for pro rata reimbursement of qualifying investments, and adds roughly 8% accretion to Scotiabank’s NAV per share estimate. Other firms, including Argus and Morgan Stanley, also adjusted views and targets in light of balance sheet dynamics and commodity tailwinds, while copper’s surge above $14,000 per metric ton and tariff-related headlines contributed to recent volatility.