Freeport-McMoRan (FCX) and Alcoa (AA) Boosted By Upgrade

Shares of commodity companies Freeport-McMoRan (NYSE: FCX) and Alcoa, Inc. (NYSE: AA) are higher today following a bullish call from analysts at Citigroup.

Today, Citigroup raised its forecast for various base metals and bulk commodities and as a result upgraded both companies from Hold to Buy. The firm raised copper to $3.34/lb in '10 and $3.47/lb in '11, aluminum $0.99/lb in '10 and $1.07/lb in '11 and iron ore +40% fines, +50% lumps, +60% pellets.

On Freeport-McMoRan, the firm said even with yesterday's rebound shares are still trailing the S&P by 8% YTD. Following the firm's commodity revisions, they believe the stock is attractively valued at 9.5x their 2010 estimate of $7.50 and 8.8x their 2011 estimate of $8.15. The firm raised their price target target price increases to $95 from $85.

On Alcoa, the firm said shares are attractively valued again after their recent slide. The firm is raising 2010 estimate to $0.72 from $0.65, 2011 to $1.10 from $0.80. The price target was maintained at $17. Analyst Brian Yu said, "At 12.2x 2011 P/E, AA is trading at a discount to its historical forward P/E multiple of 14-15x and is under valued relative to the company's mid-cycle earnings power of $1.13/sh."

In addition to the rating hikes on Freeport and Alcoa, the firm reiterated their Buy rating on Cliffs Natural Resources Inc. (NYSE: CLF) and raised their price target from $51 to $56. Estimates on Cliffs were also raised, with 2010 earnings estimate raised to $4.05 from $2.80 and 2011 raised to $5.40 from $3.80.

Shares of FCX are up 0.7 percent today, AA is up 2.7 percent and CLF is up 1.6 percent

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