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Alcoa Could Return $525M In Capital In 2018, Credit Suisse Says

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Alcoa Could Return $525M In Capital In 2018, Credit Suisse Says
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Alcoa Corp (NYSE: AA) could return $525 million in capital as dividends or buybacks in 2018, according to Credit Suisse. 

The Analyst

Credit Suisse analyst Curt Woodworth upgraded shares of Alcoa from Neutral to Outperform and increased the price target from $42 to $61. 

The Thesis 

"The aluminum market is set to tighten into 2018 as structural policies in China addressing captive coal plants and illegal smelters remain intact," Woodworth said in a Tuesday note. (See the analyst's track record here.) 

The upside to Alcoa price forecasts were driven by alumina and bauxite closures, the analyst said. 

China's smog-fighting Blue Sky policy will affect captive coal power "more acutely" in 2018, "and zero tolerance on existing policies for carbon, seasonal cuts and illegal smelters should support higher prices," Woodworth said. 

Credit Suisse raised its 2018 EBITDA estimate for Alcoa from $1.9 billion to $2.3 billion.

Alcoa's valuation is compelling and has catalysts ahead, Woodworth said. The company could be added to the S&P 500 Index in 2018, the analyst said. On the downside, Credit Suisse views China supply-side discipline and policy as the key risk.  

The Price Action

After a lackluster trend in the first half, shares of Alcoa have grinded solidly higher in the second half of 2017. The shares are up over 70 percent year-to-date. 

At the time of publication, Alcoa shares were surging 3.83 percent at $48.30.

Related Links:

3 Reasons Alcoa Is No Longer The Curtain-Raising Event Of Earnings Season

4 Reasons BMO Upgraded The 'New' Alcoa

Latest Ratings for AA

DateFirmActionFromTo
Nov 2018CitigroupMaintainsNeutralNeutral
Sep 2018Credit SuisseMaintainsOutperformOutperform
Sep 2018B. Riley FBRUpgradesNeutralBuy

View More Analyst Ratings for AA
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Posted-In: Aluminum China Credit Suisse Curt WoodworthAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

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