Market Overview

3 Analysts Weigh In On Alcoa's Earnings Beat

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Shares of Alcoa (NYSE: AA) are trending higher after the company reported the results of its second quarter Tuesday. UBS, Nomura and Sterne Agee piled in to give their updated comments on the stock following the release.

UBS - Raises Price Target From $15 to $15.50, Maintains Neutral Rating

Analyst Brian MacArthur does not seem wildly impressed with the report.

“While engineered products and solutions realized a record adjusted EBITDA margin of 23.1% and global rolled products sequentially improved on seasonal demand and continued automotive strength, these improvements were largely expected.”

The $15.50 price target was derived with a 40/60 split of six times EV/EBITDA and one time P/VAV.

Related Link: Sterne Agee Sees Fundamental Story Improving For Alcoa

Nomura - Raises Price Target From $8 to $12

Nomura started by commenting, “We view Alcoa’s continued transformation from a commodity aluminum producer to a high margin downstream manufacturer positively,” before touching on the recent acquisition of Firth Rixson.

“We now expect EBITDA to grow 7% on average over the next two years and revise our 2015E EBITDA to $3bn from $2.6bn.”

Sterne Agee - Maintains $18 Price Target and Buy Rating

The Sterne Agee note indicates that Alcoa performed well during the quarter, but that aerospace will be the catalyst driving the stock moving forward.

"In the quarter, Alcoa executed on curtailing its commodity cost structure and GRP continues to pick up automotive demand. However, we continue to believe aerospace is the next leg of the story as EP&S demonstrated with margins up 90 bsp sequentially."

Price Action

Shares of Alcoa were last trading 5.86 percent higher at $15.72 Wednesday.

Latest Ratings for AA

DateFirmActionFromTo
Dec 2014Wells FargoInitiates Coverage onOutperform
Dec 2014CitigroupMaintainsNeutral
Oct 2014Deutsche BankUpgradesHoldBuy

View More Analyst Ratings for AA
View the Latest Analyst Ratings

Posted-In: Brian MacArthur Nomura Sterne Agee UBSAnalyst Color Price Target Analyst Ratings Trading Ideas

 

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