Improved Outlook For Copper And Oil Prices Prompts A Revision In Our Price Estimate For Freeport-McMoRan To $15
Copper prices have rallied sharply over the past few weeks, post the conclusion of the U.S. presidential elections, as illustrated below.
(Source:Copper Spot Prices, LME)
President-elect Trump’s plans for an overhaul of domestic infrastructure, with an emphasis on transportation infrastructure, has changed the outlook for U.S. and global copper demand in the coming years. [1] The President-elect’s plans for $1 trillion worth of infrastructure spending over ten years is expected to boost global demand for copper in the coming years, with expectations of higher demand translating into an improved pricing outlook for the commodity as well. [2] Moreover, firming U.S. GDP growth, as reflected in the Q3 2016 GDP growth figures, is a positive for copper prices as well. [3] Given the changed outlook for copper prices, we have suitably altered our forecasts for Freeport-McMoRan’s realized copper prices. The following graph illustrates our expectations for the same.
Apart from the improved outlook for copper prices, the recent production cut by OPEC has also boosted the near term prospects for oil prices. [4] We have suitably modified our forecast for the same, which is reflected in our estimates for the realized prices for Freeport’s oil and gas division.
Changes to our pricing forecasts for both copper and oil have also translated into higher margin forecasts for both Freeport’s copper mining and oil and gas divisions. These changes to our estimates have resulted into a revision in our price estimate for Freeport-McMoRan to $15.20. Our new price estimate for Freeport reflects the improved business environment for the company.
- Will Freeport Stock Recover To Pre-Inflation Shock Highs Of $52 Per Share?
- What To Expect From Freeport’s Q2 Results
- How Is Freeport Stock Faring Amid Volatile Copper Prices?
- Copper Prices Have Recovered A Bit. Is Freeport Stock Worth A Look?
- Lower Copper Prices Will Weigh On Freeport’s Q3 Results
- What’s Happening With Freeport-McMoRan Stock?
Have more questions about Freeport-McMoRan? See the links below.
- What Is Freeport-McMoRan’s Fundamental Value Based On 2015 Results?
- What Is Freeport-McMoRan’s Revenue And EBITDA Breakdown?
- How Has Freeport-McMoRan’s Revenue Composition Changed Over The Last 5 Years?
- By What Percentage Did Freeport-McMoRan’s Revenue & EBITDA Decline Over The Last 5 Years?
- By What Percentage Can Freeport-McMoRan’s Revenue & EBITDA Change Over The Next 3 Years?
- How Will Freeport-McMoRan’s Revenue Composition Change by 2020?
- Why Have Copper Prices Declined Over The Past Year?
- Why Is China Important For The Global Copper Industry ?
Notes:
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Notes:
- Copper Prices Rise as Investors Bet on Growing Demand, Wall Street Journal [↩]
- The bashing of Trump’s $1 trillion infrastructure plan has begun, CNN Money [↩]
- U.S. GDP Growth, Bureau Of Economic Affairs Website [↩]
- OPEC Confounds Skeptics, Agrees to First Oil Cuts in 8 Years, Bloomberg [↩]