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Can Alcoa Continue Its Good Run in 4Q17?

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Part 2
Can Alcoa Continue Its Good Run in 4Q17? PART 2 OF 8

Alcoa Could Rise above $50: What Wall Street Thinks

Wall Street

Alcoa stock (AA) has been strong for the last few months. In this part, we’ll see what analysts project for Alcoa stock after its recent rally. Based on consensus estimates compiled by Thomson Reuters, Alcoa carries a mean one-year target price of $47.25, which represents 4.1% upside compared to its closing price on September 22. In comparison, Century Aluminum is trading 3.3% above its consensus target price, while Norsk Hydro’s (NHYDY) target price is similar to its closing price on September 22.

Alcoa Could Rise above $50: What Wall Street Thinks

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Alcoa received a “strong buy” rating from three analysts polled by Thomson Reuters on September 22. Eight analysts rated Alcoa as a “buy,” while the remaining three analysts have a “hold” rating on Alcoa.

Recent action

Recently, some of the brokerages revised Alcoa’s rating. Earlier this month, BMO raised Alcoa’s target price from $45 to $60, while Deutsche Bank raised the target price from $44 to $60. Deutsche Bank also raised Century Aluminum’s (CENX) target price to $20 from $15. While aluminum prices have managed to close above $2,000 per metric ton since August 8, 2017, analysts’ action was muted at best. Since Wall Street seems to have gained some confidence that aluminum’s recent gains are sustainable, we’ve seen some of the brokerages upgrade Alcoa.

Aluminum prices

Not all brokerages think that Alcoa can rise above $50. On September 22, Berenberg downgraded Alcoa to a “hold” from “buy.” It raised the target price from $41 to $44. We should remember that analysts’ recommendations for Alcoa also reflect their views on aluminum prices (RIO) (XLB).

In the next parts in this series, we’ll see which factors have been driving aluminum this year. Let’s start by analyzing the recent movement in aluminum prices.

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