Ahead of the Bell: Freeport-McMoRan Copper & Gold

After a recent drop in Freeport-McMoRan Copper & Gold Inc.'s shares alongside a decline in the price of copper, the stock is attractively priced, an analyst said as he upgraded the stock.

FBR Capital Markets analyst Luther Lu raised Freeport-McMoRan to "Outperform" from "Market Perform."

Freeport-McMoRan shares were up 2.5 percent, or $1.17, to $48.35 in premarket trading Wednesday.

The Phonenix-based copper miner's shares as of Tuesday's close have fallen back 23 percent from a nine-month high of $61.55 on June 11. The stock has fallen alongside the price of copper, Lu said in an investor's note Wednesday. On July 11, copper traded for $2.4450 a pound on the New York Mercantile Exchange, while it closed at $2.2120 a pound Tuesday.

In the long term, however, the price of the metal should trend higher as China keeps buying copper, he said. China will exhaust its copper stocks in 16 years at its current pace of demand, he said, and will continue to buy surpluses of the metal to boost reserves. Commodities analysts have called China's buying the key driving copper prices higher this year.

Lu has a 2010 forecast of $2.40 a pound for copper.

He cut his second-quarter earnings estimate by 5 cents to 67 cents per share to reflect recent commodity prices;however, he said Wall Street analysts' estimates, on average, are too low and expects the projections will be revised upward.

Analysts polled by Thomson Reuters, on average, expect a profit of 50 cents per share for the period ending in June.