Wall Street’s rating
According to consensus estimates compiled by Bloomberg, Alcoa (AA) carries a one-year price target of $11.29, which represents an 11.3% upside over its September 30 closing price. Century Aluminum (CENX) is trading 9.7% below its consensus one-year price target. Rio Tinto (RIO) and Constellium (CSTM) are trading at price levels similar to their respective consensus one-year price targets.
Of the 20 analysts polled by Bloomberg, only one rates Alcoa as a “sell” or equivalent. The remaining analysts are almost equally divided between the “buy” and “hold” camps.
The graph above shows analysts’ recent views on Alcoa. Wall Street analysts were mainly sitting on the sidelines before Alcoa’s split. On September 30, Spin-Off Research maintained its “neutral” rating on Alcoa with a target price of $11. BMO Capital Markets and RBC Capital Markets also maintained their ratings on Alcoa on September 29 with price targets of $9 and $11, respectively.
Rosenblatt Securities, among the most bullish brokerages on Alcoa, has set a one-year price target of $15. This represents a 48% upside over the company’s current price levels.
Analysts’ actions on Alcoa have been quite muted this year. However, there were some reactions to Alcoa’s earnings release. Some analysts downgraded Alcoa after the company reduced the long-term guidance for its Engineered Products and Services segment during the company’s 1Q16 earnings call.
However, Alcoa was able to win back some of the analysts with its 2Q16 earnings results. During the 2Q16 earnings conference call, Alcoa’s management worked to allay some fears relating to the aerospace slowdown. In the coming parts of this series, we’ll analyze what markets (SPY) expect for Alcoa’s 3Q16 earnings.