UPDATE: Nomura Upgrades Freeport-McMoRan Copper & Gold to Buy, Raises PT on Adjusted 2014 Estimates

In a report published Wednesday, Nomura analyst Curt Woodworth upgraded the rating on Freeport-McMoRan Copper & Gold

from Neutral to Buy, and raised the price target from $36.00 to $38.00. In the report, Woodworth noted, “We are upgrading FCX to Buy from Neutral and are increasing our target price to $38 from $36 to adjust for pro forma metrics off 2014 estimates. Our new price target assumes FCX trades in line with its historical multiple at 4.5x 2014E EV/EBITDA. In the short run, we believe FCX shares can move higher as copper prices recover from the sharp sell-off seen since early 1Q, as copper prices declined from ~$3.80/lb to the recent low of ~$3.10/lb. We believe Chinese imports should increase in the coming months owing to an open arbitrage, seasonal uptake and restocking requirements and tight scrap markets. FCX trades at very depressed forward multiples of 3.8x 2014E EV/EBITDA and 3.7x 2015E pro forma EV/EBITDA. We believe FCX has a strong asset base in oil & gas and copper with solid organic growth potential. We forecast FCX to generate cumulative FCF of $7.7 billion from 2014-2016, with net debt reduced to $8bn by YE 2016. Including deleveraging benefits, FCX trades at only 3.2x 2016 EV/EBITDA.” Freeport-McMoRan Copper & Gold closed on Tuesday at $30.43.