Freeport-McMoRan Copper Price Lift Could Reach $100 Target

Freeport-McMoRan's stock price has surged 44% this year to $73, and some analysts believe it could reach $100. However, the key driver behind this potential increase is not the company itself but rather the copper market.

The Global X Copper Miners ETF, which tracks the performance of companies that mine copper, has climbed 27% this year, outperforming the broader market. Southern Copper and Teck Resources have also seen significant gains, with their stock prices up 45% year-to-date.

The copper price is the dominant variable in determining Freeport-McMoRan's revenue mix, as each 10-cent move generates $390 million in EBITDA. The company's sensitivity math suggests that a copper price of $7 could unlock $20 billion in annual EBITDA, making it more likely for the stock to reach $100.

Freeport-McMoRan's Grasberg mine has been a significant contributor to its revenue growth this year, with production doubling in the second quarter. The company is also investing in its leach program, which aims to add 300 million pounds of incremental copper production by 2026 and ramp up to 800 million per year by 2030.

However, investors should be cautious when investing in Freeport-McMoRan stock, as it has a history of sharp drawdowns when the copper price drops. Moderate position sizing and a plan for copper reversals are essential for any investment thesis that targets $100.