Reversing course from their 27% rise in 2019, shares of Freeport-McMoRan (NYSE:FCX) plunged 15.4%% in January, according to data from S&P Global Market Intelligence. The precipitous 9.8% drop in the price of copper represented one factor in the stock's decline, but a bearish tone from Wall Street and a disappointing Q4 earnings report were additional sources of fuel for the fire.
Whereas Freeport-McMoRan's stock received an upgrade from analysts in the last month of 2019, the first month of 2020 began on a less fortuitous note. In mid-January, Curt Woodworth, an analyst with Credit Suisse, downgraded the stock to underperform from neutral and reduced his price target to $10 from $11, according to Thefly.com.
Failing to excite investors later in the month, shares traded down as much as 8% on Jan. 23, when the company released its Q4 earnings. On the top line, it reported $14.4 billion for 2019, a 23% drop from $18.6 billion in 2018. The bottom of the income statement didn't provide much solace as the company reported a $0.17 loss per share, a notable downturn from the $1.79 earnings per share for 2018.
Investors also found the cash flow statement to be disheartening, since the company reported waning operating cash flow in 2019 versus 2018. Whereas Freeport-McMoRan generated $3.9 billion in cash from operations in 2018, the company reported $1.5 billion operational cash flow for 2019.
While it's one of the more recognizable names among copper-oriented stocks, Freeport-McMoRan is far from the only choice for investors seeking exposure to the metal. The stock's recent decline nonetheless seems to reflect the fears of investors with short-term investing horizons and those with longer horizons (our favorite type of investors), suggesting that this may represent a possible entry point for some. For example, management forecasts copper sales rising steadily from 3.5 billion pounds in 2020 to 4.6 billion pounds in 2022; likewise, gold sales are expected to rise from 800,000 ounces in 2020 to 1.7 million ounces in 2022.