Should You Buy the Dip in Freeport-McMoRan Stock Today?

Freeport-McMoRan (FCX) shares are down more than 16% on Wednesday after a catastrophic mud rush incident at its Grasberg Block Cave mine in Indonesia.

The incident resulted in two confirmed fatalities and five missing workers, and forced the company to declare force majeure and suspend operations at one of the world’s largest copper mines.

Despite today’s decline, Freeport-McMoRan stock is up more than 30% versus its April low.

Investors are recommended caution in buying the dip in FCX stock today because the immediate financial impact of the Grasberg Block Cave incident is substantial.

On Wednesday, the company’s management lowered its third-quarter sales forecast by 6% for gold (GCZ25) and 4% for copper (HGZ25).

However, more concerning is the long-term outlook as 2026 production could fall approximately 35% below prior estimates, with full recovery to pre-incident levels not expected until 2027.

Significance of this disruption can’t be understated, given that the Grasberg Block Cave represents 50% of PTFI’s proven reserves and 70% of projected production through 2029.

Note that Freeport-McMoRan has insurance coverage of as much as $1 billion, but the protection is limited for underground incidents, with a cap of $700 million after a $500 million deductible.

For long-term investors, though, FCX shares still aren’t entirely out of reasons to warrant buying on the dip.

The company demonstrates financial stability with a healthy current ratio of 2.47 and a moderate debt-equity ratio of 0.31. Plus, the broader market context offers some positive signals as well – with copper prices up 2% due to supply concerns, and futures rising above $4.82 per pound.

This price increase could partially offset the production losses from Grasberg for the company’s other operations in the Americas.

Finally, copper’s long-term fundamentals remain strong, driven by rising demand from electric vehicles and renewable energy infrastructure, offering another compelling reason to load up on Freeport-McMoRan shares on the weakness.

What’s also worth mentioning is that Wall Street remains bullish on Freeport-McMoRan stock as well.

Despite the aforementioned incident, the consensus rating on FCX shares remain at “Moderate Buy” with the mean target of about $52 indicating potential upside of 40% from here.

This article was generated with the support of AI and reviewed by an editor. On the date of publication, the editor did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com