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On Thursday, Jefferies reaffirmed a buy rating and a $50.00 price target for Alcoa (NYSE:), following the release of the company’s third-quarter earnings results. The company’s analyst highlighted Alcoa’s impressive EBITDA of $455 million, up 40% from the second quarter. The results exceeded expectations thanks to better than expected realized prices and costs.
The analyst noted that alumina prices have increased significantly, with current spot prices at $680 per tonne, compared to the third quarter average of $505 per tonne. This increase is expected to further contribute to Alcoa’s EBITDA growth in the future.
In addition to the favorable pricing environment, Alcoa’s ongoing Profitability Improvement Program is expected to drive further EBITDA growth. The company’s efforts to improve profitability through this program have been recognized by analysts as a positive driver of the company’s financial performance.
The proposed resolution for the situation in San Ciprian was described by the analyst as complex. However, the overall takeaway from the analyst’s comment was that Alcoa has delivered excellent results. The company’s strong performance in the third quarter, combined with rising alumina prices and strategic improvements, support the analyst’s maintained buy rating and price target.
In other recent news, Alcoa’s aluminum production fell 4%, while aluminum production rose 3%, marking the eighth consecutive quarter of growth. Despite these production dynamics, the company saw free cash flow of $43 million.
JPMorgan raised its price target on Alcoa to $39 and maintained a neutral rating on the stock. The company expects further benefits from deferred alumina price adjustments and awaits updates on the proposed solution for the San Ciprian plant.
Recent developments also include the company achieving more than 80% of its targeted $645 million in run-rate savings, largely due to raw material cost efficiencies. Alcoa ended the quarter with a cash balance of $1.3 billion and paid a quarterly dividend of $0.10 per share.
InvestingPro Insights
Alcoa’s recent performance, as highlighted in the article, is further supported by real-time data from InvestingPro. The company’s market capitalization is $10.87 billion, reflecting its significant presence in the aluminum industry. Notably, Alcoa’s trailing twelve months revenue from Q2 2024 was $10.7 billion, with quarter-over-quarter revenue growth of 8.27% in Q2 2024, which is in line with the positive outlook from the analyst.
InvestingPro Tips shows that Alcoa’s stock price movements are quite volatile, which investors should consider in addition to the company’s strong recent performance. The company has shown robust returns over the past year, with a one-year total price return of 53.57% according to the latest data. This impressive return supports the analyst’s bullish stance and buy recommendation.
Additionally, InvestingPro Tips indicates that analysts predict Alcoa will be profitable this year, which aligns with the company’s positive EBITDA growth and Profitability Improvement Program mentioned in the article. For investors looking for a more in-depth analysis, InvestingPro offers eleven additional tips for Alcoa, which provide deeper insight into the company’s financial health and market position.
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