Seeking Alpha

Alcoa pulling back as Nomura sees significant downside risk

  • Alcoa (AA) -1.4% premarket after Nomura reiterates a Neutral rating and $7 price target on the stock, saying significant downside risk looms as LME aluminum values continue to free fall while GRP margins should be pressured in Europe owing to AA’s inability to pass on higher premiums downstream.
  • At spot aluminum of $0.80/lb., the firm estimates FY 2014 free cash flow at negative $630M, or -3.6% FCF yield.
  • While recent capacity curtailments in China are incrementally positive, Nomura still sees growing Chinese surplus over the next three years outweighing modest tightening outside of China, limiting the likelihood of a sustained market deficit.
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Comments (7)
  • ogmarti
    , contributor
    Comments (53) | Send Message
    Look out. Nomura in the house. One well-timed opinion and they suck the winds right out of the Alcoa sails. A $7 price target. The clowns have escaped the circus. Alcoa's profitability isn't all about LME aluminum prices, and China's supply is for China. Additionally, China continues to battle critical pollution issues, they will need to curtail heavy industry activity which is fueled by coal-powered steam generation plants. Next analyst please.
    2 Apr 2014, 09:34 AM Reply Like
  • Ruffdog
    , contributor
    Comments (1974) | Send Message
    Nomura is a Japanese financial services group and global investment bank. They are downgrading their competition! I wonder if Nomura owns any Japanese dedt?They look like a house of cards to me.


    Long AA and trying to buy more this morning.
    2 Apr 2014, 09:58 AM Reply Like
  • Wise Timmy
    , contributor
    Comments (298) | Send Message
    Are they also predicting a recession? That is the only way I see AA going to $7.00.
    2 Apr 2014, 10:32 AM Reply Like
  • jazzkool
    , contributor
    Comments (13) | Send Message
    Well, I see the jobs reports tomorrow and Friday having a big effect on AA's price. If jobs are up (no impact on market with ADP Employment change miss), then car sales might go up, which would be a positive for AA. JMHO.
    2 Apr 2014, 02:19 PM Reply Like
  • burtsmet
    , contributor
    Comments (8) | Send Message
    Nomura is wrong AA has opened 2 new plants for wheels an what is selling CARS an TRUCKS HI profit Nomura may force a selloff buy buy AA will be 16.00 at end of year
    2 Apr 2014, 05:14 PM Reply Like
  • Blackdog100
    , contributor
    Comments (2) | Send Message
    Nomura should stick buying US real estate...clearly their specialty.
    2 Apr 2014, 07:18 PM Reply Like
  • Ruffdog
    , contributor
    Comments (1974) | Send Message
    Clearly their specialty is not US stock research!
    3 Apr 2014, 02:37 PM Reply Like
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