Morgan Stanley downgraded FCX to an underweight today, finally coming to grips with the inexorable fact that copper is heading lower, thanks in large part to China being a giant powder keg readying to blow.
In their report, they note the horrific nature of their balance sheet and conclude copper prices simply aren’t high enough to justify buying the stock.
Truth be told, this analysis could’ve been made by a 10 yr old. Freeport is divesting assets at distressed prices in order to deleverage their balance sheet. Subsequently, they’re giving up any potential earnings upside, in the event of an upswing. In the immediate term, the price of copper has been going absolutely nowhere. As such, there’s little reason to own the shares.
Morgan cut their target to $7 from $9.
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