What happened
Rising more than 19% through the first three months of 2022, shares of Freeport-McMoRan (FCX 2.60%) gave copper investors a lot of reasons to smile. In April, however, the stock's rise came to a halt -- and then some. While the S&P 500 tumbled 8.8% last month, shares of Freeport-McMoRan fell 18.5%, according to data from S&P Global Market Intelligence.
In addition to the overall pessimism sweeping through the markets, investors clicked the sell button in response to management's report of a less auspicious forecast for 2022 and 2023 as well as unfavorable sentiment from Wall Street.
So what
Through the first three weeks of April, Freeport-McMoRan's stock didn't move notably higher or lower. But then the company reported first-quarter 2022 earnings. The company beat analysts' revenue and earnings expectations, but there were several areas that failed to shine brightly in investors' eyes. For one, management reduced copper sales guidance. In the company's fourth-quarter 2021 earnings report, management had projected the company would achieve 2022 and 2023 copper sales of 4.3 billion pounds and 4.5 billion pounds, respectively. Now, however, management expects to generate copper sales of 4.25 billion pounds in 2022 and 4.45 billion pounds in 2023.
Image source: Getty Images.
Separate from the company's Q1 2022 earnings report, investors were disheartened to find Wall Street taking a bearish stance on Freeport-McMoRan's stock. On April 22, Abhi Agarwal, an analyst at Deutsche Bank, cut his price target to $47 from $50 while keeping a hold rating on the stock, according to Thefly.com. David Gagliano, an analyst at BMO Capital, also shared a more dour view on the stock, reducing his price target to $56 from $62. Addressing the company's 2022 earnings, Gagliano also commented that he sees a less profitable year for the company and reduced his 2022 earnings-per-share estimate by $0.25 to $3.47.
Now what
While investors found some causes for concern with this copper stock, there was a hopeful sign for investors. In late April, investors learned that Hugh Grant, a member of the company's board of directors and former CEO of Monsanto, purchased 12,300 shares of the company's stock. There are a variety of reasons why one would sell shares; however, the purchase of the company's stock is a fairly good indication that the insider is bullish on the company's prospects. Possibly, Grant believed the sell-off was overdone, and it was an opportune time to increase his position.
For metals investors looking to strengthen their portfolios with an industry-leading copper stock, the recent sell-off in Freeport-McMoRan provides a compelling buying opportunity worthy of serious consideration.
