Analysts name stocks that will benefit from Trump's 50% duties on copper

Mining companies, whose revenue depends on the price of copper on the Chicago Exchange, will be the main beneficiaries of the 50% duty of the United States on the metal, which was announced by Donald Trump. This is stated in an analytical note of Bank of America. In this regard, the bank advised investors to take a closer look at two key stocks in the industry - Freeport-McMoRan and Southern Copper. The former was also recommended by JPMorgan, but it named a number of other securities.

Bank of America maintains a Buy rating for shares of Freeport-McMoRan, one of the world's largest copper mining companies, reports CNBC. Analysts at the bank have a $50 target price on the securities, suggesting a potential upside of 9.7% from the closing price on July 9.

And JPMorgan analyst William Peterson on July 9 called Freeport-McMoRan securities his "top pick" and said they are key for those investors looking to invest in the copper market, reported MarketWatch. Peterson expects the company's securities to rise 23% - to $56. Such a mark would be the highest for them since July 2011.

According to Peterson, U.S. trade policy will remain a "key swing factor" for companies dependent on regional markets. Freeport-McMoRan is much bo more tied to the U.S. market than its global peers, the JPMorgan analyst said. Its revenue from copper mines in the U.S. in the first quarter was $1.41 billion, compared with $1.2 billion from operations in South America and $1.26 billion in Indonesia. In addition to copper, the company mines gold and molybdenum.

BofA noted that about 36% of Freeport's projected revenue in 2025 will come from selling copper at U.S. prices on the Chicago Metals Exchange (CME). There, copper is typically priced about 600 basis points higher than on the London Metal Exchange, CNBC noted. And after the announcement of the possible imposition of duties, the gap grew to 1,400 basis points.

"For copper producers who sell at CME prices, it means higher actual revenues generated," explained Bank of America analyst Lawson Winder.

Freeport-McMoRan shares rose 1.6 percent in Wednesday trading, but ended the day down 1.5 percent. They hit an eight-month high a day earlier. Since the beginning of the year, Freeport-McMoRan securities are up 19.7%, while copper futures are up 35.3% and the S&P 500 index is up 6.1%.

Freeport-McMoRan is scheduled to release its second quarter financial results on July 23. On average, analysts polled by FactSet expect revenue to rise 19.9% - to $7.19 billion, and earnings per share to increase to $0.46 from $0.4 a year ago. Peterson's forecast is for $0.48 per share. 

Bank of America also singled out Southern Copper as a beneficiary of the copper boom. It, in addition to copper, mines molybdenum, zinc, silver and gold. However, analysts maintained a "below market" rating for the company's shares, and their target price implies a 25% drop in price - to $75. BofA forecasts that 40% of Southern Copper's expected revenue in 2025 will come from sales of copper at U.S. CME prices. 

JPMorgan maintains a positive view on the securities of Ivanhoe Electric, which is exploring and developing copper deposits in the U.S., as well as on shares of one of the largest copper producers in North America, Canada's Teck Resources, MarketWatch reports.

"We would buy copper stocks on any technical pullback," Peterson wrote.

Analysts at Bernstein on Tuesday reiterated an "outperform" rating for key copper-related stocks: these are Antofagasta, Glencore and Rio Tinto.

On July 8, copper futures rose 17% at the moment and hit an all-time high after U.S. President Donald Trump announced that he plans to raise duties on U.S. copper imports by 50%. Quotes were down 4% on Wednesday.

The increase in duties on copper imports was expected by the market: because of this, supplies were already being redirected toward the U.S., where stockpiles were accumulating in warehouses, noted Bernstein analysts on Tuesday. But they still raised their forecasts for metal prices. Trump's decision will push quotes up to $10,000 a ton in the third quarter, and the price will be around $9700 a ton in the fourth quarter, Bernstein believes.

This article was AI-translated and verified by a human editor