Shares of Alcoa AA are trending higher after the company reported the results of its second quarter Tuesday. UBS, Nomura and Sterne Agee piled in to give their updated comments on the stock following the release.
UBS - Price Target From $15 to $15.50, Maintains Neutral Rating
Analyst Brian MacArthur does not seem wildly impressed with the report. “While engineered products and solutions realized a record adjusted EBITDA margin of 23.1% and global rolled products sequentially improved on seasonal demand and continued automotive strength, these improvements were largely expected.”
The $15.50 price target was derived with a 40/60 split of six times EV/EBITDA and one time P/VAV.
Related: Sterne Agee Sees Fundamental Story Improving For Alcoa
Nomura - Price Target From $8 to $12
Nomura started by commenting, “We view Alcoa’s continued transformation from a commodity aluminum producer to a high margin downstream manufacturer positively,” before touching on the recent acquisition of Firth Rixson.
“We now expect EBITDA to grow 7% on average over the next two years and revise our 2015E EBITDA to $3bn from $2.6bn.”
Sterne Agee - Maintains $18 Price Target and Buy Rating
The Sterne Agee note indicates that Alcoa performed well during the quarter, but that areospace will be the catalyst driving the stock moving forward. "In the quarter, Alcoa executed on curtailing its commodity cost structure and GRP continues to pick up automotive demand. However, we continue to believe aerospace is the next leg of the story as EP&S demonstrated with margins up 90 bsp sequentially.
Price Action
Shares of Alcoa were last trading 4.1 percent higher Wednesday to $15.47.
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