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Can Century Aluminum Continue Its Rise?

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Analysts’ views

Century Aluminum (CENX) was among the best-performing aluminum stocks (AA) (NHYDY) in 2016, with gains of 94%. The stock has continued its good run in 2017 and is now trading with YTD (year-to-date) gains of 45%. In this final part of our series, we’ll see how analysts are rating Century Aluminum stock after its sharp rally.

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Consensus estimates

According to consensus estimates compiled by Thomson Reuters, Century Aluminum has a mean one-year price target of $11.2, which represents a 9.7% downside over its closing price on March 21, 2017. Four out of five analysts polled by Thomson Reuters rated Century Aluminum as a “hold.”  Only one analyst has rated the stock as a “sell.”

We’ve seen some analysts re-rate Century Aluminum after its 4Q16 earnings, however. On February 24, BMO raised Century Aluminum’s target price from $9 to $12, with a “market perform” rating, but J.P. Morgan cut Century Aluminum’s target price from $18 to $13 on the same day. Interestingly, J.P. Morgan had raised Century Aluminum’s target price from $7 to $18 in the first week of February.

Deutsche Bank Downgraded Century Aluminum to “sell” on March 28, while raising its target price from $9 to $10.

2016 earnings

Century Aluminum posted adjusted EBITDA of $29 million in 2016, as compared to $100 million in 2015. The company’s 2016 earnings were impacted negatively due to higher alumina costs. Century Aluminum produces aluminum by sourcing alumina (RIO) (XME) from outside parties. As a result, Century Aluminum’s profitability tends to fall when alumina prices rise.

You can read Market Realist’s Aluminum Producers’ 2016 Performance and 2017 Plans for a comparative analysis of aluminum companies’ 2016 earnings. For ongoing updates on this industry, keep checking in with our Aluminum page.

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