FCX's Earnings Beat Masks 2026 Copper Sales Downgrade, Validating DeepValue Caution

What happened

Freeport-McMoRan reported Q4 earnings that exceeded expectations, but concurrently trimmed its 2026 copper sales volume outlook. This revision follows the severe Grasberg mud-rush incident in September 2025, which the DeepValue report identified as a major operational risk. While Q4 volumes surpassed prior guidance, the cut to future sales suggests ongoing recovery challenges and potential delays in the phased restart plan. The report emphasizes that FCX's stock price at $58.71 embeds high expectations for a smooth Grasberg recovery and sustained copper premiums. This guidance reduction signals that management's ability to meet these expectations is under pressure, highlighting execution risks beyond the earnings headline.

Implication

The trim in 2026 copper sales volume directly challenges the market narrative of a swift Grasberg recovery, which is priced into FCX's elevated multiples. With the stock trading at 41x trailing P/E, any volume shortfalls could trigger significant downside as earnings estimates are revised. This news corroborates the DeepValue report's view that FCX is a crowded trade vulnerable to execution missteps. Investors should await clearer evidence of operational progress, such as the Q2 2026 Grasberg restart, before considering entry. In the meantime, maintaining a cautious stance or trimming positions aligns with the asymmetric risk profile highlighted in the report.

Thesis delta

The news confirms the DeepValue report's thesis that FCX faces substantial execution risks at its Grasberg asset, which are not fully reflected in the current stock price. It underscores that even positive earnings surprises can obscure underlying volume challenges, reinforcing the recommendation to avoid new capital at these levels. No fundamental shift in the thesis is required, but the risk of downside has increased slightly.