Alcoa (AA) has been making big changes–maybe not caterpillar to butterfly changes–but perhaps pollywog to frog. And that’s a good thing, says Deutsche Bank’s Jorge Beristain, who upgraded Alcoa’s shares today. He explains why its “metamorphosis [is] on track”:
Bloomberg We admittedly are now “eating crow”, as we had misjudged the turn-around now apparent in Alcoa’s upstream Primary smelting business due to (still rising) US premia plus an improved global aluminum price. The net effect has been a resurrection of a business unit that had heretofore been a headwind for Alcoa’s overall finances…
10 Best High Tech Stocks To Watch For 2015
Alcoa has focused shutting high-cost smelters/refineries, while simultaneously increasing exposure to more stable downstream segments (ie, aerospace, automotive and construction) over the past few years. These mix changes, along with higher-than-expected realized aluminum prices have led to a re-rating of the stock, which has risen 75% over the past 12 months. We believe these factors will continue to support an earnings turn-around and see upside driven mainly by Primary Metals EBITDA which could recover from a 2013 cyclical low of $475m to $1.8bn by 2016, despite a lower capacity footprint.
Shares of Alcoa have dropped 0.7% to $16.44 at 1:50 p.m.
No comments:
Post a Comment