A Buy recommendation has recently been issued to mining giant Freeport-McMoRan Copper & Gold, Inc. (FCX) by Zacks senior mining industry analyst Paul Raman, CFA. Here's how he presents his case in favor of the company:
'Freeport-McMoRan Copper & Gold is engaged in the exploration, development, mining and milling of copper, gold and silver in Indonesia. The company is witnessing strong growth backed by improved productivity and a strong cash flow position. The merger with Phelps Dodge Corporation has positioned the company as the second largest copper producer and the largest publicly traded copper company globally.
'Currently, shares of FCX are trading at 14.1x our 2007 EPS estimate of $8.25. The merger between PD and FCX make us positive about the company's future prospects, as Freeport has become a larger company with a diversified operation base.
'FCX's sales reached 1.5 billion pounds of copper, 1.9 million ounces of gold and 17 million pounds of molybdenum in the first half of 2007. The benefits associated with the merger with Phelps Dodge and FCX's strong productivity-related growth raise our optimism over the stock in the coming years.
'The stock price is moving up after the merger announcement indicating strong fundamentals. We believe the stock will move ahead further. Hence, we maintain our positive outlook on the stock and rate it a Buy. A rise in the prices of copper and gold lead us to raise our six-month target price to $125.00. This is 15.1x our 2007 EPS estimate.'
Read the full analyst report on FCX.
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