Hook / Thesis
Freeport-McMoRan (FCX) is one of the clearest ways to play a copper market that looks structurally tight: production constraints, surging industrial demand (AI data centers, EVs), and coordinated government efforts to shore up critical minerals. The company is reporting profit growth — quarterly revenue of $5.63B and adjusted EPS beats in Q4 2025 — and management lays out a phased restart of Grasberg that should add meaningful copper and gold output in 2026. I am raising my price target and taking a long trade now to capture the operational recovery and commodity tailwinds.
In short: I am initiating a long trade at $63.00 with a stop at $55.00 and a target of $80.00. The holding period is long term (180 trading days) to give the Grasberg ramp and copper price momentum time to drive earnings and multiple expansion.
What Freeport does and why the market should care
Freeport-McMoRan is a diversified copper, gold and molybdenum producer with major operations across North America, South America and Indonesia. Key assets include North America open-pit mines (Morenci, Bagdad, Safford, Sierrita, Chino), Cerro Verde in Peru, El Abra in Chile, and the Grasberg complex in Indonesia. The company also operates refining and rod mills and a smelting business in Europe.
Why the market cares: copper is central to electrification and data center buildouts. Recent reporting and policy moves show governments coordinating to secure critical minerals and stockpile resources - a dynamic that favors large, well-capitalized producers. Freeport sits squarely in that sweet spot: large scale, exposure to both concentrate and refined copper, and optional upside from Grasberg’s phased restart.
Backing the thesis with the numbers
Operational and financial highlights supporting the trade:
- Recent quarter: Q4 2025 revenue came in at $5.63B and adjusted EPS of $0.47, a beat and confirmation that margins are recovering as metal prices stay elevated (company release on 01/22/2026).
- 2026 production guidance (management): about 3.4 billion pounds of copper and 0.8 million ounces of gold, reflecting expectations for a phased Grasberg restart.
- Market snapshot: market cap roughly $90.2B, enterprise value about $95.8B, trailing EV/EBITDA ~10.9x. Trailing EPS in the dataset is $1.53 with a P/E around 41x.
- Cash flow and balance sheet: trailing free cash flow is about $1.116B and debt-to-equity ~0.5, giving the company flexibility to invest in production re-starts and return capital when appropriate.
Valuation framing
At roughly $62.95 today the market values Freeport at ~$90B. On an absolute basis EV/EBITDA ~10.9x is not cheap for a mining company in a cyclical upcycle, but it is reasonable given the mix of higher-margin refining/rod operations and the scale of expected 2026 copper and gold output. The P/E near 41x looks stretched if metal prices normalise, but it is consistent with a near-term earnings profile supported by record metals prices and one-time operational improvements.
In other words, the stock trades like a growthier commodity name — the multiple is justified only if elevated prices and Grasberg’s ramp increase near-term free cash flow materially. If copper stays strong and Grasberg adds ounces on schedule, FCX can re-rate from current multiples toward a premium to peers because of scale and integrated operations.
Technical and sentiment context
Technically FCX sits above its 10- and 20-day moving averages (SMA10 ~$62.44, SMA20 ~$61.80) with the 50-day around $55.41, which offers a structural support band. RSI ~56 indicates room to run without being overbought. MACD histogram is slightly negative, signalling near-term momentum could be mixed — a reason to use a firm stop. Short interest has increased modestly but days-to-cover remain low (~1-2 days), so squeezes are possible but limited.
Trade plan (actionable)
Entry: $63.00 (use a limit)
Stop Loss: $55.00 - this sits below the 50-day moving average and recent price support levels; a clear close below $55 would indicate a breakdown in the copper re-rating story or a negative surprise on Grasberg operational timing.
Target: $80.00 - the target reflects a re-rate to a higher multiple as profits and free cash flow expand with higher copper realizations and incremental output from Grasberg. $80 equates to about a 27% upside from the $63 entry.
Horizon: long term (180 trading days) - the timeline gives the market time to digest operational updates, the phased Grasberg restart expected to progress in Q2 2026, and for any persistent copper strength to translate into higher quarterly earnings and FCF. Expect volatility - treat this as a thesis-based trade, not a quick scalp.
Catalysts (what will drive the trade)
- Grasberg phased restart and subsequent production updates (management has signaled phased ramp in Q2 2026) - each positive operational update should be a re-rating event.
- Copper price trajectory: persistent strength or further upside (driven by AI data center builds, EV penetration and supply constraints) will materially increase cash flow and earnings power.
- Quarterly results beating consensus: further revenue and EPS beats would validate the higher multiple and support upside to $80.
- Macro/supportive policy: government programs to secure critical minerals, plus any supply-side disruptions at other large producers, would tighten the market and favor FCX.
Risks and counterarguments
Mining stocks are cyclical and volatile. Here are the primary risks and a counterargument to my bullish stance:
- Operational risk at Grasberg: Grasberg’s restart is phased and complex; any prolonged delays or accidents could materially reduce expected 2026 volumes and delay the anticipated earnings lift.
- Metal price reversal: The valuation assumes elevated copper prices. A sharp drop in copper from current highs would compress margins and could push the P/E down quickly.
- Geopolitical and trade risk: Indonesia regulatory changes, trade tensions, or export restrictions could impair production. Also, tariff risks and global trade frictions could ripple through industrial demand.
- Execution and cost inflation: Rising operating costs, labour disputes, or higher capital spend at key mines could erode margins and delay free cash flow improvements.
- Counterargument: One could reasonably argue FCX is already priced for perfection: the market cap near $90B and P/E ~41x assume sustained high copper prices and smooth operational recovery. If metal prices revert toward historical norms, the stock could fall substantially even if Grasberg performs. For conservative investors, waiting for clearer evidence of sustained FCF improvement or lower multiples might be prudent.
What would change my mind
I will reassess and potentially cut the position if any of the following occur:
- A multi-week close below $55.00 (technical and operational red flag).
- Clear evidence that Grasberg’s restart will be delayed beyond Q3 2026 or that production guidance is materially reduced.
- A sustained >20% drop in copper prices that materially reduces forward earnings and cash flow expectations.
Conclusion
Freeport-McMoRan offers a compelling asymmetric trade today: a sizable commodity-linked upside if copper remains strong and Grasberg returns to meaningful production, balanced by a manageable balance-sheet and improving cash flow. The market has already priced some of those tailwinds into a stretched P/E, so the risk is not trivial. That said, with an entry at $63.00, a protective stop at $55.00 and a target of $80.00, the trade gives a defined risk with multi-catalyst upside over a long-term (180 trading days) horizon. I will add to or trim the position as operational confirmations arrive; absent those confirmations, the stop limits downside if the market re-prices the commodity cycle.
Trade summary: Long FCX at $63.00; stop $55.00; target $80.00; horizon - long term (180 trading days). Manage position size given volatility and watch Grasberg updates and copper price action closely.