Morgan Stanley Hikes Alcoa's Q4 Estimates

Paretosh Misra of Morgan Stanley revised his fourth quarter estimates for

on Wednesday while maintaining an Overweight rating and $20 price target. Misra is now projecting Alcoa to earn $0.30 per share in the fourth quarter, up from a prior estimate of $0.25. According to Misra, every $10 per barrel change in oil prices translates to an $80 million to $90 million change in annual EBITDA for Alcoa. The analyst believes that aluminum producers benefit from lower anode costs and lower fuel oil costs. Looking forward, Misra is projecting Alcoa's first quarter 2015 earnings per share should improve “sequentially” by $0.03 per share if spot prices remain at current levels. Finally, Misra believes that Alcoa could announce production cuts at its Spanish smelters early next year, which could prove to be a “catalyst” for the aluminum sector.