Alcoa (AA, $20.83) shares get bumped up to outperform by Credit Suisse, on restructuring plans and expected profit boost
Shares of Alcoa climbed around +6% Wednesday, following a rating upgrade by Credit Suisse.
Analysts at Credit Suisse raised their rating on the aluminum products and wrap maker’s stock to outperform from neutral. They also hiked their price target on the shares to $27 from $26.
Credit Suisse analyst Curt Woodworth indicated that he expects alumina prices to bounce back on "significant" capacity cuts in China, the ending of inventory destocking, and the reported shutdown of the Alpart plant by Chinese Jiuquan Iron & Steel.
Woodworth also believes that raw material inputs for alumina, like caustic soda, energy, and calcined coke are declining in price and therefore boosting profit margin for Alcoa.
Woodworth also mentioned that Alcoa's restructuring efforts should result in significant tailwinds to its mid-cycle free cash flow starting early 2020. On Monday, Alcoa announced its restructuring plan that will eliminate at least one of its units, consolidate sales and lower costs, and downsize its executive team to seven department heads from 12 that report to the CEO. Woodworth predicts that Alcoa’s restructuring will lead to potential savings of $60-80 million, and he expects the company to quantify the impact this quarter.
Alcoa shares appear "significantly undervalued on most metrics" , Woodworth noted.
AA in upward trend: price expected to rise as it breaks its lower Bollinger Band on January 03, 2025
AA may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options. In of 35 cases where AA's price broke its lower Bollinger Band, its price rose further in the following month. The odds of a continued upward trend are .
Technical Analysis (Indicators)
Bullish Trend Analysis
The RSI Oscillator points to a transition from a downward trend to an upward trend -- in cases where AA's RSI Oscillator exited the oversold zone, of 27 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
The Stochastic Oscillator demonstrated that the ticker has stayed in the oversold zone for 1 day, which means it's wise to expect a price bounce in the near future.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where AA advanced for three days, in of 296 cases, the price rose further within the following month. The odds of a continued upward trend are .
Bearish Trend Analysis
The 10-day moving average for AA crossed bearishly below the 50-day moving average on December 16, 2024. This indicates that the trend has shifted lower and could be considered a sell signal. In of 18 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where AA declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for AA entered a downward trend on January 08, 2025. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (1.767) is normal, around the industry mean (2.043). P/E Ratio (0.000) is within average values for comparable stocks, (30.919). AA has a moderately low Dividend Yield (0.011) as compared to the industry average of (0.044). P/S Ratio (0.627) is also within normal values, averaging (0.801).
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. AA’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. AA’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 81, placing this stock better than average.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
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General Information
a miner of bauxite and aluminum
Industry Aluminum