Freeport-McMoRan Earnings: Top Copper Play On Deck As FCX Stock Sets Up

Freeport-McMoRan earnings are due before Thursday’s open, as the price of copper continues to provide a bullish backdrop for FCX stock.

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After ending 2021 around $4.40 a pound, copper has been forming a base around $4.70-$4.80, easing to $4.66 on Wednesday. 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 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.

In January, Freeport-McMoRan (FCX) trimmed its 2022 copper sales volume outlook to 4.3 million pounds from 4.4 million, but raised 2023 guidance to 4.5 billion from 4.4 billion. However, FCX introduced 2024 guidance for copper sales of 4.2 billion pounds.

That may have contributed to a short-lived post-earnings selloff for FCX stock.

On the cost front, Freeport said that average unit net cash costs should average $1.35 per pound of copper in 2022, vs. $1.34 in 2021.

Still, Freeport-McMoran earnings growth should be strong in 2022, though slowing from 2021’s recovery surge.

FCX Stock

Shares slid 1.5% to 49.90 in Wednesday’s stock market action but found support around their 21-day moving average. FCX stock has been hugging that technical level, after backing off a 10-year high of 51.99 hit on March 25.

A weekly chart shows FCX stock hewing close to its 10-week moving average. The recent low volume and tight weekly action also contribute to the picture of strong institutional support.

While FCX stock, up about 20% for the year, has been riding high lately with other metal and mining stocks, the copper major went through its own bear market last year.  FCX stock corrected by more than one-third from May to September last year.

The point is that FCX stock is hardly extended, up less than 10% from its May 2021 high. A break above the down-sloping trendline from FCX stock’s March 25 high could be actionable, with the 10-week bounce providing another positive signal.

FCX stock could form a new base by April’s end.

A longer consolidation phase may be in the cards while questions build over the strength of the U.S. and global economy.

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