Sterne Agee Raises Estimates For Alcoa

Sterne Agee raised its EPS estimates on Alcoa Inc AA Tuesday and maintained a Buy rating with a $20 price target after the company reported earnings.

Analyst Josh W. Sullivan noted that “AA beat consensus by $0.05 as the two-engine strategy played out successfully again.

“The commodity portfolio continues to deliver on cost containment while the value-added segments leverage trends in aerospace/automotive.”

Looking ahead into 2015, Sullivan commented that “aerospace will grow 10 percent, GRP margins will begin a mix shift, and cost containment with commodity assets will continue. Therefore, we would continue to be constructive as Alcoa executes across all business segments with secular trends in aerospace, automotive, and commodities providing tailwinds.”

Sullivan concluded that “Alcoa is executing on the fundamental themes which support our near-term $20 price target. After incorporating 4Q14, EP&S/GRP momentum, and cost improvements, we are increasing our 2015 and 2016 EPS estimates by $0.13 and $0.15, to $1.16 and $1.39, respectively.”

Alcoa Inc recently traded at $16.25, up 0.49 percent.