Stifel Weighs In On Alcoa, Continues To See Increasing Aluminum Demand From The Auto Industry

Alcoa Inc AA reported its fourth quarter results on Monday after market close. The company earned $0.33 per share, beating the consensus estimate of $0.26 per share while revenue of $6.40 billion topped expectations of $5.99 billion.

In a note on Tuesday, Paul Massoud of Stifel commented that the earnings beat was largely driven by the company's upstream businesses. The analyst adds that even though LME aluminum prices have recently pulled back (down 4.5 percent since the start of the first quarter 2015 reference period), the elevated regional premiums will support realized pricing in 2015.

Massoud estimates Alcoa's realized aluminum price will average $2,450 per metric ton in the first quarter and gradually increase to $2,650 per metric ton.

“We continue to see increasing aluminum demand from the auto industry as a transforming secular story still in its early stages, and we expect earnings contribution from autos should continue to grow for many quarters as a result of both current and future automobiles,” Massoud wrote.

Massoud rates Alcoa as Buy rated with a $20 price target.

Anka Metcalf, CEO and founder of TradeOutLoud, told Benzinga that the daily uptrend in shares of Alcoa remains intact following the earnings print and shares continue to set higher lows.

"The pattern is strong with an outstanding gain through out 2014,” Metcalf commented. "The stock has reached a prior resistance area from back in 2011 and the last six months has been testing and consolidating in that area on the monthly chart."

Metcalf added, "The daily uptrend remains intact, continuing to set higher lows. We will evaluate the potential gap in price that is likely to happen on Tuesday morning and initiate. We will look to buy over the $16.00 area and we are looking at $15.00 for a stop loss area. Potential targets: $17.75, $18.50 and projections into $20.00. We will be looking at this trade from a position trade perspective as well as swing."