S&P Target price: $135
We think increased demand for durable goods in China and India, along with less rapid increases in the supply of copper, will support generally higher prices, sales and profits over the longer term. Thus, we remain positive on the prospects for FCX. Near term, we believe that the PD merger will be mildly dilutive, due to PD's cost of production being higher than that of FCX. Down the road, though, the merger should be positive, given that it achieves geographic diversification for FCX. In our opinion, the concentration of FCX's mining assets in Indonesia prior to the merger was a drag on its valuation. Recently trading at 8.8X our 2009 estimate and yielding about 1.7%, we think shares of FCX are attractively valued. On that basis, our recommendation is buy.
$83.13 (08/06/08)
