B. Riley Reiterates Buy Rating on Alcoa with $92 Price Target
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 6 days ago
0mins
B. Riley reiterated a Buy rating and $92 price target on Alcoa (AA) after the company announced the acquisition of South32's (SOUHY) bauxite, alumina, and aluminum assets. The firm believes the initial selloff in Alcoa shares is a reflection of investors' preference for near-term shareholder returns and aversion to incremental leverage, especially to acquire alumina assets while market fundamentals remain weak. In addition, the firm views the selloff as entirely overdone and sees the transaction as more favorable than immediate shareholder returns for a number of reasons, including meaningful synergies unlocked over the medium to long erm, the greater scale strengthening Alcoa's commercial capabilities, and debt issuance being meaningfully offset through a combination of near-term cash flow from the existing footprint, asset sales, any cash from the lockbox should metal prices remain high, and the monetization of the Ma'aden shares.
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Analyst Views on AA
Wall Street analysts forecast AA stock price to rise
8 Analyst Rating
2 Buy
4 Hold
2 Sell
Hold
Current: 48.680
Low
38.00
Averages
57.63
High
78.00
Current: 48.680
Low
38.00
Averages
57.63
High
78.00
About AA
Alcoa Corporation is a vertically integrated aluminum company comprised of bauxite mining, alumina refining, aluminum production (smelting and casting), and energy generation. The Company's operations are comprised of two business segments: Alumina and Aluminum. The Alumina segment primarily consists of its bauxite mines and alumina refineries, and its operations include the mining of bauxite and other aluminous ores, as well as the refining, production, and sale of smelter grade and non-metallurgical alumina. The alumina produced by this segment is sold primarily to internal and external aluminum smelter customers; a portion of the alumina is sold to external customers who process it into industrial chemical products. The Aluminum segment consists of the Company's aluminum smelting and casting operations along with the Company's energy production assets in Brazil, Canada, and the United States. It has direct and indirect ownership of over 25 operating locations across eight countries.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Manufacturing Index Decline: The June ISM manufacturing index fell by 0.7 to 53.3, below the expected 53.9, reflecting a slowdown in manufacturing activity and exacerbating market concerns about economic deceleration.
- Inflation Expectations Improve: The June ISM prices paid sub-index dropped to 73.0, a four-month low, exceeding market expectations and suggesting easing inflation pressures that could influence the Fed's monetary policy decisions.
- Optimistic Earnings Outlook: Bloomberg Intelligence forecasts a 23% increase in Q2 earnings, primarily driven by AI infrastructure stocks, indicating market confidence in future profitability despite the current poor stock performance.
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- Employment Data Impact: The June ADP employment change increased by only 98,000, below the expected 120,000, signaling signs of a slowdown in the US labor market, which exacerbated market worries about economic growth and led to stock market pressure.
- Oil Price Decline: WTI crude oil prices fell nearly 1%, hitting a 4.25-month low, as positive negotiations between US officials and Iran improved expectations for energy supply, potentially affecting future oil price trends.
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