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Do Wall Street Analysts Find Value in Alcoa’s Split?

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Nov. 20 2020, Updated 4:19 p.m. ET

Wall Street analysts

Previously in this series, we looked at the value proposition offered by the future Alcoa Corporation. We also looked at the challenges and opportunities the new company would face after the split. Now let’s see how Wall Street analysts are rating Alcoa (AA) ahead of its all-important split.

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Analyst ratings

According to consensus estimates compiled by Bloomberg, Alcoa carries a one-year price target of $32.68, which represents a 21.6% upside over its October 21, 2016, closing price. Century Aluminum (CENX) and Rio Tinto (RIO) are trading 5.8% and 4.1%, respectively, below their consensus price targets. Constellium (CSTM) is trading 30.0% below its consensus price target.

Of the 20 analysts polled by Bloomberg, only one rates Alcoa a “sell” or equivalent. Eight analysts rate the stock a “buy,” while the remaining 11 analysts rate it a “hold.”

Recent action

Some analysts cut Alcoa’s price target after its 3Q16 earnings release. Seaport Global Securities lowered it from $33 to $29.50, while Macquarie cut it from $39 to $34. Goldman Sachs also cut Alcoa’s price target from $30 to $28 after Alcoa’s 3Q16 earnings and guidance failed to impress.

Wall Street analysts have mainly been sitting on the sidelines waiting for Alcoa to split. We did saw some customary target price updates after the earnings release, but overall analyst actions have been muted at best. The markets (DIA) seem to be playing a wait-and-watch game when it comes to Alcoa’s split.

Meanwhile, Alcoa’s split could face some short-term challenges. You can read Alcoa’s Split: Do the Benefits Outweigh Short-Term Challenges? to find out more.

You can also visit our Aluminum page for ongoing updates on this industry.

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