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Century Aluminum Shares Lower Following BMO Downgrade

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BMO Capital’s David Gagliano has downgraded the rating on Century Aluminum Co (NASDAQ: CENX) from Outperform to Market Perform, while maintaining a price target pf $6.

Following the 40 percent rally in the stock over the two days since the company’s earnings release, Gagliano believes that the stock is now fairly valued.

“Beyond valuation, we maintain our opinion that 1) CENX will swing from a cash burner to a cash generator beginning in 1Q16; and 2) CENX shares are still well-positioned to continue to rally if underlying aluminum prices continue to rally,” the BMO Capital report said.

Gagliano explained that Century Aluminum’s fair value estimate was “extremely sensitive” to even slight changes in the underlying aluminum price assumptions.

According to BMO Capital’s estimates, “every $0.01/lb change in the underlying aluminum price affects CENX’s fair value by ~$1/share, based on 6.0x-6.5x the EBITDA generation potential at various underlying aluminum prices.”

At the current share price, Gagliano estimates that Century Aluminum is pricing in an aluminum price environment of $0.72-$0.75/lb.

Latest Ratings for CENX

DateFirmActionFromTo
Mar 2019MaintainsEqual-WeightEqual-Weight
Jan 2019UpgradesSellHold
Dec 2018Initiates Coverage OnEqual-Weight

View More Analyst Ratings for CENX
View the Latest Analyst Ratings

Posted-In: BMO Capital Markets DAvid GaglianoAnalyst Color Downgrades Analyst Ratings

 

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