Can Century Aluminum Continue Its Rise?



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.

Article continues below advertisement

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.


More From Market Realist