Freeport-McMoRan is at the top, shares rising on long-term outlook

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Freeport-McMoRan (FCX) reported fourth-quarter earnings that beat Wall Street estimates, but fell year-on-year due to lower copper prices and higher costs. Shares of FCX rose during Wednesday’s stock action.




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Freeport posted an average copper price of $3.78 per pound in the fourth quarter, up from $4.41 a year earlier. On Wednesday, copper futures fell 2.5 cents to $4.21 a pound, near their highest level since May.

Copper prices have moved up on demand expectations as the Chinese economy reopens and there is a greater likelihood that Europe and the US will avoid a recession this year. Longer term, Freeport expects widespread copper supply shortages as new demand fueled by the transition to green energy exceeds the capacity of mining projects currently under development. The mining investment needed to close that gap will require higher copper prices, Freeport said.

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Freeport-McMoRan Earnings

estimates: FCX earnings were expected to fall 53% from a year ago to 45 cents per share. Sales fell 12% to $5.4 billion.

Results: Adjusted earnings per share fell 46% to 52 cents, while revenue fell 6.6% to $5.76 billion.

Outlook: Freeport management now expects 2023 copper sales of 4.2 million pounds in 2023, equal to 2022. Projected gold sales of 1.7 million ounces in 2022 would lag 1.8 million ounces. Unit cash costs rise to $1.60 per pound of copper versus $1.53 in Q4 and $1.50 for all of 2022.

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FCX stock

FCX shares rose 2.2% to 45.58 intraday Wednesday, on track for the best close in nine months. On Tuesday, FCX shares fell 0.8% to 44.59. FCX shares broke out of a cup-with-handle base pattern on Nov. 30, clearing a buy point of 39.26. After trading in a narrow range for four weeks, it broke higher again on Jan. 6.

FCX shares are now slightly extended from the official buy point and 50-day moving average. A longer period of basing or retreating to its 50-day line can bring it back into play.

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It is possible that FCX shares form a tight three-week price, which could be used as a quasi-grab in a ten-month deep consolidation.

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