Freeport-McMoRan earnings easily topped estimates before Thursday's open. But FCX stock fell sharply as management offered guidance for higher costs and slightly lower-than-expected output.
Freeport-McMoran 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 0.6% to $4.68 a pound, reflecting constrained supplies. 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, a decline of about 1%. 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, or nearly 7%.
FCX Stock
FCX stock dived nearly 10% to 44.95 in Thursday's stock market action, after losing 1.5% on Wednesday.
FCX stock gapped below its 21-day moving average, then kept on tumbling through its 50-day line. FCX stock closed below that latter critical support level for the first time since early February.
After January's earnings, FCX stock lost steam, before Russia's invasion sparked a breakout and run to new highs on Feb. 25. Another period of consolidation might now be in the cards while questions over the strength of the U.S. and global economy are resolved.
