FCX: Freeport-McMoRan Inc. Bearish Options Setup

Freeport-McMoRan (FCX) is a leading international metals company, primarily focused on copper production, but also producing gold and molybdenum. Key assets include the 'Grasberg minerals district' in Indonesia, the 'Morenci minerals district' in Arizona, and the 'Cerro Verde operation' in Peru. FCX produces copper in concentrate, cathode, and continuous cast copper rod forms. Gold is mainly produced as a component of copper concentrate or anode slimes. Molybdenum is sold as molybdenum concentrate and molybdenum-based chemicals. The company sells its products globally, with significant customers including 'Mitsubishi Materials Corporation' and 'PT Smelting'. FCX differentiates itself through its high-quality, long-lived copper assets, experienced team, and by focusing on productivity, cost management, and responsible production, evidenced by its commitment to the 'Copper Mark' and 'Molybdenum Mark' at its operating sites.

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FCX's technical outlook is bearish. The recent price action shows a sharp decline from approximately $46 in early September to the current price of $39.365. The price is below its 21-day EMA ($41.48) and the 50-day SMA ($42.43), indicating a downtrend. The MACD (-0.07) is below its signal line (-0.14), and while the MACDh is positive, the overall MACD trend suggests bearish momentum. The RSI of 47.94 is also trending downward, showing weakening buying pressure. The Stochastic Oscillator (STOCHk) at 42.03 and STOCHd at 45.30 confirm the lack of upward momentum. The ADX at 11.89 indicates a weak trend, but the recent price drop suggests that the bears are gaining control. The ROC20 is at a low 2.13. The price is currently testing the lower Bollinger Band, suggesting potential for further downside. Given these factors, FCX is likely to continue its downtrend over the next 1-3 months.

Freeport-McMoRan's recent MD&A paints a moderately positive picture, albeit with some complexities. Consolidated revenues increased to $7.6 billion in the second quarter of 2025, up from $6.6 billion in the same period of 2024. For the first six months of 2025, revenues reached $13.3 billion, compared to $12.9 billion in the first half of 2024. This growth was attributed to higher sales volumes of copper and gold, as well as increased average realized prices, particularly for gold. However, operating cash flows for the first six months of 2025 were $3.3 billion, down from $3.9 billion in the first six months of 2024, reflecting lower copper and gold sales volumes, an increase in accounts receivable, and higher tax payments in Indonesia. The company projects consolidated operating cash flows to approximate $7.0 billion for the year 2025, assuming specific prices for copper, gold, and molybdenum in the second half. A significant development is the startup of PTFI's new smelter in Indonesia, expected to be fully operational by year-end 2025, which should transform PTFI into a fully integrated producer of refined copper and gold. The company is also monitoring the impact of U.S. trade policies, including tariffs, and is evaluating alternative sourcing options to mitigate potential cost increases. Capital expenditures are projected at $4.9 billion for 2025, with a focus on major projects and PTFI's downstream processing facilities. The company has a strong liquidity position with $4.5 billion in cash and cash equivalents and expects that available cash and projected operating cash flows will exceed capital expenditures.

Freeport-McMoRan's Q2 2025 earnings call presents a moderately bullish outlook, driven primarily by strong copper market fundamentals and the company's strategic positioning. While there was a revision to the near-term gold production forecast, the long-term outlook remains consistent. Kathleen Quirk highlighted that copper and gold sales were 'better than [indiscernible]' and net unit cash production costs improved to $1.13 per pound. The company is benefiting from a premium on U.S. copper sales, approximating $1.25 per pound, translating to an estimated $1.7 billion annual financial benefit. Management is focused on execution, scaling the leach opportunity, and ramping up the PTFI smelter in Indonesia, which started a month ahead of schedule. While the Grasberg ore grade revision resulted in an approximate 15% reduction in expected 2025 gold production, this is viewed as a timing issue rather than a fundamental change, with no significant impact on copper production. The company is targeting a 40% increase in the leach run rate to achieve 300 million pounds by year-end, on its path to 800 million pounds per annum. The company is targeting unit costs to trend to the $2.50 per pound range in 2027.

FCX's financial performance presents a mixed picture. Revenue has been volatile, starting at $6.21B in Q1 2024, peaking at $7.582B in Q2 2025, and then plummeting to -$13.136B in Q3 2025. The gross profit ratio also shows inconsistency, fluctuating between 0.226 in Q1 2025 and 0.314 in Q4 2023, before dropping to 0.292 in the latest quarter. Operating cash flow has been generally positive, with $1.664B generated in the most recent quarter. Total debt has decreased from $9.853B in Q4 2023 to $0.383B in Q3 2025, indicating improved solvency. However, the negative revenue in the latest quarter raises significant concerns, despite the strong operating cash flow and reduced debt. The inconsistent profitability and recent revenue decline suggest potential challenges for the company's near-term financial stability.

The company presents a moderately bullish investment profile based on its key metrics and financial ratios. Revenue has shown positive growth, indicating a healthy demand for its products or services. The gross margin has remained relatively stable, suggesting efficient cost management. The Return on Equity (ROE) indicates a solid return for shareholders. The Price-to-Earnings (P/E) ratio suggests the company is appropriately valued by the market. The debt-to-equity ratio has seen a decrease, showcasing the company's improved financial leverage. The current ratio signifies the company's strong ability to meet its short-term obligations. Overall, the company demonstrates a stable and growing business model with a healthy balance sheet, making it a moderately attractive investment for the next 6-12 months.