Stifel Lowers Alcoa's Price Target By A Buck

Shares of Alcoa Inc

are down about 4 percent on Thursday, after the company missed revenue estimates when reporting financial results on Wednesday. To better reflect the impact of lower premiums, Stifel analysts Paul Massoud and Anthony Shen adjusted their second quarter estimates and trimmed their price target on the stock from $20 to $19. Despite the reductions, the firm maintains a Buy rating on shares of the company, maintaining its longer term thesis that Alcoa is "shifting its portfolio away from the upstream business and raising exposure to value add businesses that should continue to benefit from aerospace demand and rising aluminum consumption from autos." The price target drop was triggered by the lukewarm results and the decline in LME aluminum prices and regional premiums. These led Stifel to lower its realized aluminum price for 2Q15 from $2,500 per tonne to $2,350 per tonne. As a result, they now estimate second quarter EPS of $0.24, versus their previous estimate of $0.27 (Street consensus is $0.26). Their 2015 EPS estimate is now $1.21, down from $1.25 previously (Street consensus is $1.06) as the first quarter beat is offset by somewhat lower aluminum price assumptions in the second quarter.