The shares need about $4.50 of 2027 earnings at 16 times to hold $71. Grasberg volumes can get there if copper stays near $6.25. That is a market-like return, not a bargain.
Key points
- $71.14 requires about $4.45 of 2027 earnings at 16 times.
- 3.72 billion pounds of 2027 copper sales is my 20% lift from July’s 3.1 billion pound 2026 plan.
- $4.60 is my 2027 EPS at $6.25 copper; 15.5 times that is $71.
The call
The price treats next year’s restored Grasberg output as if copper stays near today’s $6.58 a pound. At 16 times, that math needs $4.45 of earnings. Spot copper is already that high; the option market still prices a 11% move around the October 27 print.
Operating income by quarter ($ billions)SEC company facts through Q2 2026; Q3-Q4 2026E and 2027E are mine
I use $6.25 copper, $3,800 gold, and the company’s own 20% copper and 50% gold volume step-up. That produces $4.60 of attributable earnings. A 15.5 times multiple, in line with a mid-cycle miner, lands at $71. The market is about right, not too optimistic.
Valuation
| Item | Figure |
|---|
| 2027 copper sales (mine) | 3.72 billion lb |
| Copper price assumption | $6.25 / lb |
| 2027 EPS (mine) | $4.60 |
| Multiple | 15.5 times |
| 12-month target | $71 |
Fifteen times is what a copper producer earns when volumes are rising but the metal is already expensive. Being right on Grasberg and wrong on copper nets little; being right on both still leaves a market return. A hold, not a buy.
Copper sales outlook (billion pounds)Company July 23, 2026 guidance for 2026; 2027E is my 20% lift from that plan
Risks
- Grasberg recovery slips past mid-2027; watch quarterly mill rates versus the 65% then 80% path.
- Copper falls below $5.50; watch LME cash versus the $6.25 I used.
- Bagdad capital is approved near $4.5 billion and 2027 capex jumps; watch the second-half 2026 investment decision.
What would change my mind
A copper price that holds above $7 through the October print with Grasberg on the 80% path would justify a higher multiple.