- Alcoa Corp AA reported fourth-quarter revenue of $2.7 billion, which beat average analyst estimates of $2.65 billion. The company said fourth-quarter revenues declined 7% sequentially.
- Alcoa reported an EPS loss of $(0.70), beating average analyst estimates of $(0.75).
- Alcoa said it faced challenging market conditions throughout the year, including high costs for raw materials and energy and lower sequential pricing in the Alumina and Aluminum segments in the fourth quarter.
- Following the Q4 results, BMO Capital Markets lowered estimates and the target price to $50 from $55 with a Market Perform rating.
- The analyst writes that while aluminum prices have improved significantly recently, so too have Alcoa shares.
- BMO says prior expectations for meaningful near-term cost improvements appear largely offset by bauxite-related mine plan approval delays, translating to grade/cost headwinds in alumina from 2Q'23-4Q'23.
- After factoring in the updated operating/financial targets, BMO estimates spot-based annualized EBITDA of ~$1.9-$2.1 billion, translating to spot-based EV/EBITDA of ~5.3-5.7x... essentially fully valued, within the context of the current stage of the aluminum pricing cycle.
- Price Action: AA shares are down 4.81% at $50.88 on the last check Thursday.
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