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Deutsche Bank 'Eats Crow' And Upgrades Alcoa

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Deutsche Bank upgraded Alcoa Inc (NYSE: AA) from Hold to Buy and raised the price target from $16 to $20.

Analyst Jorge Beristain, noted that "following better-than-expected 3Q14 results and incorporating [the] pending $3bn Firth Rixon acquisition," the firm made the upgrade.

"We admittedly are now "eating crow", as we had misjudged the turn-around now apparent in Alcoa's upstream Primary smelting business due to (still rising) US premia plus an improved global aluminum price. The net effect has been a resurrection of a business unit that had heretofore been a headwind for Alcoa's overall finances. Overall, our 2014- 16E EBITDA revised up 8-9 percent," according to the report.

Beristain saw "upside driven mainly by Primary Metals EBITDA which could recover from a 2013 cyclical low of $475m to $1.8bn by 2016, despite a lower capacity footprint."

The price target "equates to ~7.5x 2015E EV/EBITDA, provided simply as a cross-check, which is below Alcoa’s peers," according to the report.

Alcoa Inc recently traded at $16.44, down 0.66 percent.

Latest Ratings for AA

DateFirmActionFromTo
Apr 2019MaintainsOverweightOverweight
Apr 2019UpgradesHoldBuy
Apr 2019DowngradesBuyNeutral

View More Analyst Ratings for AA
View the Latest Analyst Ratings

Posted-In: Deutsche Bank Jorge BeristainAnalyst Color Upgrades Price Target Analyst Ratings

 

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