Morgan Stanley downgraded Freeport-McMoRan (FCX) to underweight with a $7 target on Wednesday. The move is odd in that the numbers presented by the analysts don't add up to what the company forecasts. The analysts forecast that the stock trades at 6x EV/EBIDTA based on copper prices hitting $2.75/lb though Freeport-McMoRan suggests the stock trades at this valuation based on the current copper price of $2.15/lb. The difficult part is understanding where in the world Morgan Stanley comes up with these multiples. Freeport-McMoRan made the following forecast before the Tenke and Deepwater Gulf of Mexico deals. By my best guess, Freeport-McMoRan is on a pace for EBITDA close to $5 billion placing the EV/EBITA multiple around 6 with the current low copper prices. Remember that the company expects huge cash flows at these prices with upside of up to $325 million on every $0.10 increase in copper prices. At $2.75/lb, the copper miner would generate another $2 billion in EBITDA and huge free cash flows. The company has a ton of moving parts with all of the sales and the issues in Indonesia, but the numbers presented by MS just don't add up. Freeport-McMoRan is a huge buy if the stock dips to $7. Disclosure: Long FCX (very small position)