Deutsche Bank Cuts Price Targets for Major Commodity Plays; Still Bullish on the Sector Though (FCX, CLF)

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Analysts at Deutsche Bank on Tuesday offered some tepid commentary for mining giants Freeport-McMoRan Copper & Gold Inc. ( FCX ) and Cliffs Natural Resources Inc. ( CLF ).

The firm maintained its "Buy" rating on CLF but slashed its price target from $105 to $80. That new target still suggests a 70% upside to the stock's Monday closing price of $47.11.

Meanwhile, the analyst also kept its "Buy" rating on FCX but lowered its target from $52 to $45. That new target suggests a 30% upside to the stock's Monday closing price of $34.53.


A Deutsche Bank analyst commented, "Most Metals & Mining (M&M) equities posted negative returns in 2Q12, in sync with declining commodity prices on fears of escalation of European sovereign risk and deterioration in 'real' economic activity in US/China. Capex overruns, cost inflation and rising country risk (ex-US/Canada) with governments stepping in to garner a larger share of the mining profits have altogether led to further sector de-rating. While some more pain in 3Q12 is possible, we feel that much of the pessimism is already priced in by the market. We anticipate some level of government intervention to stimulate waning growth, benefiting commodity prices and in-turn producers by 4Q12."

The Bottom Line
Shares of Freeport McMoran ( FCX ) have a 3.62% dividend yield, based on last night's closing stock price of $34.53. The stock has technical support in the $30 price area. If the shares can firm up, we see overhead resistance around the $38-$40 price levels. Shares of Cliffs Natural Resources ( CLF ) have a 5.31% dividend yield, based on last night's closing stock price of $47.11. The stock has technical support in the $40 price area. If the shares can firm up, we see overhead resistance around the $52-$56 price levels.

Freeport-McMoRan Copper & Gold Inc. ( FCX ) and Cliffs Natural Resources Inc. ( CLF ) are both currently rated "Neutral" by Dividend.com.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Stocks

Referenced Stocks: CLF , FCX

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