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's Stochastic Oscillator is sitting in oversold zone for 11 days
The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an uptrend is expected.
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Notable companies
The most notable companies in this group are Alcoa Corp (NYSE:AA).
Industry description
Aluminum is widely used in the industries like construction, packaging and automotive sector. The segment has seen increased demand for the lightweight variety in automobiles in improving fuel efficiency. The U.S. aluminum industry generates nearly $71 billion a year in direct economic impact (according to The Aluminum Association). Arconic, Inc, Alcoa Corp and Kaiser Aluminum Corporation are major aluminum companies in the U.S.
Market Cap
The average market capitalization across the Aluminum Industry is 6.52B. The market cap for tickers in the group ranges from 138.37K to 54.35B. DKIAF holds the highest valuation in this group at 54.35B. The lowest valued company is NORNQ at 138.37K.
High and low price notable news
The average weekly price growth across all stocks in the Aluminum Industry was -4%. For the same Industry, the average monthly price growth was -9%, and the average quarterly price growth was 10%. AWCMF experienced the highest price growth at 0%, while KALU experienced the biggest fall at -18%.
Volume
The average weekly volume growth across all stocks in the Aluminum Industry was -19%. For the same stocks of the Industry, the average monthly volume growth was 105% and the average quarterly volume growth was 36%
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
Valuation Rating: 45
P/E Growth Rating: 55
Price Growth Rating: 65
SMR Rating: 68
Profit Risk Rating: 81
Seasonality Score: 19 (-100 ... +100)