Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Alcoa Shares Plunge After Revenue Miss on Light Volumes, Analyst Sees Buying Opportunity

Published 04/21/2022, 03:57 AM
Updated 04/21/2022, 08:29 AM
© Reuters.  Alcoa (AA) Shares Plunge After Revenue Miss on Light Volumes, Analyst Sees Buying Opportunity

© Reuters. Alcoa (AA) Shares Plunge After Revenue Miss on Light Volumes, Analyst Sees Buying Opportunity

Alcoa (NYSE:AA) shares are down more than 6% in premarket trading Thursday following the company’s worse-than-expected Q1 sales report.

Alcoa generated $3.29 billion in sales in the first quarter, up 15% YoY but below the consensus estimates of $3.44 billion. The company reported adjusted EPS of $3.06, up from 79c in the same period last year and beating the consensus projection of $2.84 per share.

Adjusted EBITDA stood at $1.07 billion in the period, up from $521 in the year-ago period and compared to the analyst expectations of $1.04 billion.

Aluminum production totaled 498,000 mt, down 9.1% YoY and below estimates of 526,533.

Wolfe Research analyst Timna Tanners reiterated an Outperform rating and lowered the price target to $102.00 per share (from $105.00) after “light Q1 volumes.” The analyst is still bullish on this commodity stock and sees a buying opportunity amidst an after-hours selloff.

“We would be buyers of any weakness after Q1 results, even as we trim 2022E EBITDA to $4.2B from $4.7B and EPS to $12.25 from $12.80 on lower alumina forecasts and assuming some cost pressure. Aluminum prices look well supported by limited new supply and elevated global costs, and we see structural demand resilience from favorable packaging and light-weighting trends. Investors seem keen to own miners for a hedge against inflation, and this sector rotation can support valuation, in our view,” Tanners said in a client note.

BMO analyst David Gagliano lowered the price target to $95.00 per share from $99.00 to reflect incremental cost pressures and lower expected bauxite results.

“Bigger Picture: AA remains well positioned to benefit from higher-for-longer aluminum prices, in our view. But, the rally in AA shares has brought valuations to reasonable levels… hence maintaining the Market Perform,” the analyst wrote.

By Senad Karaahmetovic

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.