Analysts Weigh In On Alcoa's Q1 Results

Alcoa Inc

shares fell more than 4 percent after the company reported better-than-expected earnings for the first quarter, but the company missed analysts' sales estimates. The lightweight metals manufacturer posted first quarter earnings of $0.07 per share, $0.05 above the Street's consensus, on revenue of $4.95 billion, which missed the already-low expectations by $190 million as lower aluminum prices weighed on the results. Meanwhile, Alcoa said it is mulling another reduction of up to 1,000 positions at its Engineered Products and Solutions unit. "The business reduced its workforce by 600 positions in the first quarter and plans a further reduction of 400 positions," Alcoa said in a press release. http://finance.yahoo.com/news/alcoa-reports-first-quarter-2016-231800813.html Following is the take of various Wall Street analysts on the results: Michael Gambardella of JPMorgan – Neutral, PT raised to $9 from $8 "We do think AA is in a much better position now to deal with lower aluminum premiums and prices than it was several years ago." However, the analyst said: "We remain Neutral on AA given its exposure to aluminum prices and as we don't believe the company's decision to separate its upstream and downstream businesses will create significant additional value unless Alcoa is able to merge its upstream business with a similar size upstream producer." The analyst raised 2016 EPS view to $0.42 from $0.28. Evan Kurtz of Morgan Stanley – Overweight, PT $11 "We were surprised by strong results and guidance in the upstream business. After a strong 1Q performance, management expects 2Q ATOI to improve by $25mn sequentially, excluding the impact of pricing and FX, which we think will help limit the drag from a weaker than expected 2Q downstream guidance." Curt Woodworth of Credit Suisse – Outperform, PT $13 "We Remain Bullish on Alcoa. AA finally reset the bar for the downstream guidance with revised EPS guidance inline with CS 2016 estimates. While the Street received "sticker shock" from the weaker guide at Firth Rixson, overall EPS growth remains positive." Commenting on the split, the analyst noted: "We continue to see SOTP value creation from the split but acknowledge the story is more dependent on BiW margin upside and recovery in Upstream." The analyst cut 2016 EPS view to $0.30 from $0.43, while the consensus calls for EPS of $0.34. Shares of Alcoa fell 3.64 percent to $9.39.