Prudential downgraded Phelps Dodge (PD
) to neutral from overweight, explaining that the copper producer's industry faces weaker than expected demand.
Analyst John Tumazos is downgrading Phelps Dodge at the same time he lowers his rating on the copper industry to neutral from favorable. He lowers his 2.5% 2005 global copper demand growth estimate to 1.2% and his 5.2% 2006 global demand growth estimate to 4.0%. He says housing starts and vehicle production in the US are expected to have negative to flat year over year comparisons, while demand in South Korea and Taiwan is weak. He keeps his 2006 copper price forecast of $2.00 per pound. With regard to Phelps Dodge's earnings, he maintains a $17.70 2006 EPS estimate. He has a $160 stock price target.