Aluminum Glut Dents Alcoa’s Prospects

“We rate ALCOA INC (AA) a HOLD”.


Macquarie has a Neutral rating and lowered its price target to $12 from $13. The company has received recommendation from many analysts. Ten analysts have rated the stock with a hold rating, eleven have given a buy rating and one has given a strong buy rating to the company’s stock. The reported EPS of $0.28 was $0.02 away from what Wall Street analysts had expected.

Alcoa has been increasing the share of value-added businesses in its revenues. Due to the stock’s strong downtrend, its oversold condition may remain that way and should be discounted. It has increased by 23% from the same period of last month.

” class=”local_link” target=”_blank”>aluminum has come to pass. Sharply falling premiums have not been offset by a rising LME price, which has also fallen”.

Aluminum prices will be highly influenced by marginal costs over the next five years, which have been rebased by lower coal prices especially in China, and as a result, Deutsche Bank has cut our forecasts by 13% over the next five years.

In a recent report, Morgan Stanley analyst Paretosh Misra lowered his price target on shares of Alcoa to $16, after a downward revision in the 2015-2017 EBITDA estimates. This is the consensus price target based on the 11 polled by Zacks Research.

On a different note, The Company has disclosed insider buying and selling activities to the Securities Exchange, Tata Ratan, Director of Alcoa Inc., had purchased 3,405 shares on April 10, 2015. The stock has a consensus analyst price target of $15.83 and a 52-week high of $17.75. The total value of the transaction was $44,742. This time around, the options market is expecting a 5.4% swing – based on AA’s near-term at-the-money straddle – and considering the weekly 7/10 11-strike call is pricing in higher implied volatility than the put (76.2% vs. 73.7%), it appears the action is expected to resolve itself to the upside. Option exercises are not covered. In addition, a spate of acquisitions over the past year should boost the volumes of the company’s Engineered Products and Solutions (EPS) business segment. Alcoa’s products are used worldwide in aircraft, automobiles, commercial transportation, packaging, building and construction, oil and gas, defense, consumer electronics, and industrial applications.


According to them, the company Global Rolled Products (GRP) and EPS divisions produce value-added light metal products with focus on the automotive and aerospace markets-represent 57.4% of Alcoa’s revenue in the first quarter, up from 54.4% in 2012.