Freeport-McMoRan earnings easily topped estimates before Thursday’s open. Meanwhile, the price of copper gained ground, continuing to provide a bullish backdrop. But FCX stock fell in morning stock market action as management offered guidance for higher costs and slightly lower-than-expected output.
Freeport-McMoran (FCX) earnings grew 110% to $1.07 per share, 13 cents ahead of estimates. Revenue rose 36% to $6.6 billion, on rising output and higher copper prices.
On Thursday, the copper price rose about 1% to $4.70. After ending 2021 around $4.40 a pound, copper has been forming a base around $4.70-$4.80. While a feared disruption in supply amid Russia’s invasion of Ukraine has mostly been avoided, mining protests in Peru have shut some capacity. Plus, the direction of China’s economy is still seen as an incremental positive for copper demand, despite Covid lockdowns.
The bigger picture is that that muted pricing for most of the past decade has weighed on investment, and most industry analysts see long-term support copper prices. Meanwhile, demand for copper as a key facilitator of the energy transition is accelerating.
Beyond the price of copper, the outlook for production and unit costs are the usual factors that can move the needle for FCX stock as it reports earnings.
New guidance for copper sales continued the recent trend of modest trims. Freeport-McMoran now expects to sell 4.25 million pound in 2022, down from guidance of 4.3 million in January. For 2023, the company now sees sales of 4.45 million, trimmed from 4.5 million. Sales are seen slipping to 4.2 million pounds in 2024.
Meanwhile, Freeport bumped up the outlook for its average net cash cost per pound of copper to $1.44 from $1.35.
FCX stock slid 5.6% to 47.08 in Thursday morning’s stock market action, after losing 1.5% on Wednesday.
FCX stock, which has been hugging its 21-day moving average recently, gapped below that support and is now testing more critical support at its 50-day line.
After January’s earnings, FCX stock lost steam, before Russia’s invasion sparked a…