Seeking Alpha

Alcoa started with a Buy and $15 target at Sterne Agee

Alcoa (AA -0.2%) is initiated with a Buy rating and $15 price target at Sterne Agee, which believes each of Alcoa's three market segments are poised to "enjoy independent secular trends."

AA's downstream segment, which is 52% aerospace sales, will benefit “as destocking abates and as the long-term aerospace delivery cycle engages Alcoa's world class fastener, investment cast, and forging operations,” the firm says.

For the midstream segment, the analyst expects 1.2M tons of auto sheet by 2025, but this number “could grow more than 2x as adoption accelerates across platforms.”

43% of AA's sales come from the upstream commodity segment, which are "executing on cost curve improvements through utilization [and] rationalization."

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Comments (2)
  • manfredthree
    , contributor
    Comments (2663) | Send Message
    We strongly concur. And KK is very careful keeping enough primary capacity to hedge costs if the Chinese ever decide to no long subsidize the metal . In the meantime, AA enjoys the value added to metal products that are artificially more competitive from the China subsidy. Raising the question , will aluminum be as competitive once the metal cost eventually rises to reflect long term replacement costs.
    14 Mar 2014, 07:00 PM Reply Like
  • Ruffdog
    , contributor
    Comments (2540) | Send Message
    Aluminum prices have to rise, supplies are tanking by 10,000 ton/day. Check out:

    17 Mar 2014, 03:32 PM Reply Like
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