Aluminum company Alcoa Corp. AA posted a third-quarter sales beat and an adjusted EPS miss amid an industrial landscape that's been altered by tariffs.
The Analysts
- Morgan Stanley analyst Piyush Sood reiterated an Overweight rating on Alcoa with a $57 price target.
- Bank of America Merrill Lynch analyst Timna Tanners reiterated a Buy rating and $60 price target.
Earnings Data
Alcoa demonstrated a strong beat, but its fourth-quarter guidance is light, BofA's Tanners said in a Tuesday note.
The company reported adjusted EBITDA of $795 million, as alumina costs hurt the sector less than expected, the analyst said.
Morgan Stanley's Sood said Alcoa's announcement of a $200-million share buyback builds confidence in its capital return story.
“We think this will provide support near-term to the stock and should help limit the downside next time stock hits a weak patch. Management's comments suggest that the capital allocation strategy for 2019 and even beyond may be announced in Q4 earnings.”
BofA's Tanners said the buyback is the tip of the iceberg.
“Although we expect it to still prioritize paying down its underfunded pension and health care near term, its year-to-date $1.3-billion liability reduction to $2.2 billion as of September showed strong strides even before reflecting a higher discount rate.”
Price Action
Alcoa shares were up 6.13 percent at $38.95 at the time of publication Thursday.
Related Links:
Citigroup: Alcoa Fairly Valued At Current Levels, But Constructive In The Longer Term
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