Is Freeport-McMoRan Still a Buy After a 25% Rally in 2025? Valuation Analysis Amid Copper Demand Optimism and Expansion Potential

The 25.1% year-to-date rally in Freeport-McMoRan's (FCX) stock price in 2025 has sparked debate about whether the mining giant remains a compelling investment. With copper demand surging amid the global energy transition and FCX's aggressive expansion plans, the question hinges on whether the stock's valuation stretch justifies its long-term potential.

Valuation Metrics: A Mixed Picture

FCX's trailing price-to-earnings (P/E) ratio of 33.37 as of December 2025 exceeds both its 3-, 5-, and 10-year averages and the Basic Materials sector average of 25.36. While this suggests the market has priced in optimism, forward-looking metrics offer a more nuanced view. The forward P/E of 23.26 and the projected 2026 P/E of 21.5x indicate a potential re-rating as earnings growth materializes.

The price-to-book (P/B) ratio further complicates the picture. As of August 2025, FCX traded at a P/B of 3.06, up from 2.37 in December 2024 according to Macrotrends. This reflects growing investor confidence in the company's asset base, particularly its copper reserves. However, the P/B remains below historical peaks for the sector, suggesting there is room for appreciation if demand trends persist.

A critical divergence emerges from discounted cash flow (DCF) analysis. Analysts estimate FCX's intrinsic value at $110.21 per share, implying the stock is undervalued by 57% despite its recent rally. This disconnect highlights the market's cautious approach to near-term risks versus the long-term potential of copper demand.

Copper Demand: A Tailwind for Growth

Global copper demand is poised for a seismic shift. Industry forecasts project the market to reach $339.95 billion by 2030, driven by renewable energy, electric vehicles (EVs), and infrastructure modernization. Copper's role in EVs-up-to four times more than in traditional vehicles-and its use in wind turbines and solar panels position FCX as a key beneficiary.

Freeport-McMoRan's strategic alignment with this trend is evident. The company produced 4.21 billion pounds of copper in 2024, with 2026 output projected to rise 8% to 1,950 thousand metric tons. Expansion projects like the Lone Star mine in Arizona, expected to add 100,000 metric tons annually, underscore FCX's capacity to scale production. Additionally, the company's push to classify copper as a U.S. critical mineral could unlock tax incentives, further enhancing margins.

Balancing Valuation and Growth

While FCX's current P/E of 32.95x exceeds its calculated fair ratio of 28.09x, the stock's valuation appears justified by its growth trajectory. Analysts remain bullish, with 24 Wall Street firms assigning a "Buy" rating and an average price target of $47.73. The DCF analysis's $110.21 intrinsic value, though ambitious, hinges on assumptions about copper prices and production efficiency. If FCX meets its expansion targets and demand outpaces supply, the stock could see significant upside.

However, risks persist. Macroeconomic volatility, interest rate uncertainty, and geopolitical tensions could temper demand or disrupt operations. FCX's reliance on Indonesia and the U.S. for production also exposes it to regulatory and environmental scrutiny.

Conclusion: A Buy for the Long-Term

Freeport-McMoRan's 25% rally has brought its valuation into the spotlight, but the company's strategic positioning in a high-growth sector and robust expansion plans justify its current premium. While the P/E ratio suggests some overvaluation, the DCF analysis and analyst consensus point to untapped potential. For investors with a multi-year horizon, FCX remains a compelling buy, provided they are comfortable with the near-term risks and confident in the copper demand narrative.