Apr. 7, 2014, 5:35 PM
Apr. 7, 2014, 8:42 AM
- Alcoa (AA) is upgraded to Hold from Sell with a $10 price target, up from $7.50, at Deutsche Bank, which cites its expectation of higher realized aluminum prices for the foreseeable future; however, the firm sees continued downside risk given the increasingly “black-box" nature of regional premia price support.
- A weekend WSJ report says Alcoa, which reports Q1 earnings tomorrow, may be turning around due to its commitment to using aluminum for cars as it invests $575M to expand new lines in Iowa and Tennessee, and aluminum producers have began to cut capacity to try to counteract a glut.
- The firm reiterates Buy ratings on Freeport McMoRan (FCX) and Cliffs Natural Resources (CLF) due to potential near-to-medium term catalysts - resumption of Indonesia copper exports for FCX and progress towards monetization of the Bloom Lake mine for CLF.
Apr. 2, 2014, 8:11 AM
- 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.
Apr. 1, 2014, 11:41 AM
- BHP Billiton’s plans to consider a spinoff of its nickel, manganese and aluminum assets sets a good path for Alcoa (AA), Sterne Agee says.
- Alcoa should look to spin off its Engineered, Products & Solutions (downstream) segment to capture the peak valuations of the aerospace cycle, including a 0.35x debt-to-capital ratio, Sterne says; a spinoff would still enable the remaining mid/upstream units to "retain the secular automotive opportunity, cost curve improvements, and commodity upside, as well as a much-reduced debt burden."
- The firm’s sum-of-the-parts analysis values AA at $22/share, up from its current target price of $15.
Apr. 1, 2014, 8:58 AM
- Alcoa (AA) says it plans to spend $40M to expand its rolling mill in Itapissuma, Brazil, to capture the growing demand in Latin America for specialty aluminum foils for packaging.
- AA says demand for specialty packaging in Brazil is expected to rise 7% annually over the next three years.
- Commissioning of the facility is expected to start in 2016.
Mar. 28, 2014, 9:35 AM
- Alcoa (AA +1.1%) says it will cut 147K metric tons of capacity at two aluminum smelters in Brazil, as increased costs have made the plants uncompetitive.
- Alcoa had placed 460K metric tons of smelting capacity under review last year; once all announced curtailments and closures are complete, it will have ~800K metric tons, or 21%, of smelting capacity offline.
Mar. 27, 2014, 12:43 PM
- Alcoa (AA +6.1%) shares are surging after a U.K. court ruling that for now nixes a planned overhaul of warehouse operations by the London Metal Exchange.
- The High Court in London ruled in favor of Russian aluminum producer Rusal, which fears prices of its products will suffer from the LME's efforts, that the consultation process had been unfair.
- LME reforms designed to make owners of warehouses in the exchange's global network deliver metal more quickly to consumers had been due to take effect April 1.
- ETFs: JJU, FOIL.
Mar. 25, 2014, 10:41 AM
- U.S. Steel (X +2%) CEO Mario Longhi will tell the U.S. Congressional Steel Caucus today that South Korean steelmakers are dumping steel pipes and tubes in the U.S. and have created a network of related companies in order to evade U.S. trade laws.
- Sales of pipes and tubes sold to oil and gas extracting companies have helped profitability at U.S. Steel, representing 48% of 2013 operating income, as well as other steelmakers such as Nucor (NUE +0.6%).
- Other steel names: AKS +2.3%, ZEUS +2.2%, WOR +1.4%, STLD +1%, CMC +0.9%.
- Aluminum names: CSTM +2.5%, CENX +2.1%, KALU +1%, AA +0.4%, RS +0.2%.
Mar. 14, 2014, 3:59 PM
- 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."
Mar. 11, 2014, 3:49 PM
- Alcoa (AA +1.7%) has enjoyed a 15% run YTD, and Morgan Stanley’s Paretosh Misra thinks shares look expensive at 34x 2014 earnings forecasts vs. the historical one-year forward P/E of 14x, but the firm sees three reasons Alcoa shares could hold up nicely.
- Stanley thinks Q1 consensus looks too low; based on quarter-to-date average FX, alumina and aluminum prices, the firm sees Q1 EPS at ~$0.10 vs. current consensus of $0.04.
- The auto body sheet story has gained traction, the firm says, sensing investors may overlook weakness in near-term earnings given the focus on 2015-20.
- Alumina prices are $15/ton below the YTD peak level, but the firm cites some expectation that Indonesia may not restart bauxite export this year, which could tighten the market.
- Still, Morgan’s base case for AA stock is $11, 11% lower than today’s price.
Mar. 10, 2014, 8:08 AM
- Mining shares, highly sensitive to Chinese demand, are weak in premarket trade after Chinese exports last month slumped 18% from a year ago, in contrast to the 5% increase that was expected by economists.
- Although the sharp drop raised concerns over Asia's largest economy, distortions due to the long Lunar New Year holidays could have contributed to the surprise fall.
- CLF -2.1%, BHP -1.9%, RIO -1.9%, FCX -1.3%, AA -1.3% premarket.
Feb. 25, 2014, 12:57 PM
- Alcoa (AA -0.9%) says it reached a deal to renew its existing power supply agreements in Quebec, but no longer plans to build a new potline to replace the two it closed at its Baie-Comeau facility last year.
- AA now plans to invest $250M at its Becancour, Deschambault and Baie-Comeau facilities in Quebec over the next five years, and shift some of Baie-Comeau's production to make more of the kinds of aluminum used by automakers.
- AA had warned that if Hydro-Québec went ahead with a planned rate hike, the three smelters would no longer be competitive.
Feb. 18, 2014, 7:21 PM
- GM is accelerating efforts to field a largely aluminum-bodied next-generation pickup truck by late 2018, recently locking in supply contracts with Alcoa (AA) and Novelis which are now working to increase their aluminum sheet production to supply the GM pickup, WSJ reports.
- The push to develop an aluminum intensive large pickup marks an apparent change of direction for GM; before Ford (F) unveiled its 2015 F-150 with a body made almost entirely of aluminum, GM execs had questioned whether such a vehicle could be cost competitive or appealing to U.S. customers.
- GM is said to believe it can offset Ford's head start by using more advanced welding techniques to produce a lighter, stronger and easier to assemble truck.
Feb. 18, 2014, 7:42 AM
- Alcoa (AA) says it will close an aluminum smelter and two mills in Australia by the end of the year because they "are no longer competitive and are not financially sustainable today or into the future."
- Alcoa has been idling and closing smelters to reduce capacity, as it confronts stubbornly low prices for aluminum due to global overcapacity; when these latest moves are completed, Alcoa will have cut its smelting capacity by 17%.
- The company expects to take restructuring charges of $0.22-$0.25/share, with 60% in Q1.
Feb. 11, 2014, 9:06 AM
- Believing several automotive platforms will move toward partial or full aluminum exposed body in the coming years - the Ford-150 is merely "the tip of the iceberg" - Goldman Sachs upgrades Constellium (CSTM) to Conviction Buy from Buy with a $35 price target from $27 and raises Alcoa's (AA) target to $15 from $12.
- The firm sees the gradual conversion of automotive exposed body to aluminum as a "game changer for downstream aluminum use, with a growth rate higher than any other end market for specialty metals for the rest of this decade."
- CSTM +2.3%, AA +1.4% premarket.
Jan. 21, 2014, 10:35 AM
- Alcoa (AA +5.2%) continues its unlikely march higher, as J.P. Morgan predicts tightening aluminum markets and higher prices will boost earnings.
- "Given the pace and amount at which premiums have recently increased, it is clearly difficult to forecast for how long they will remain near current levels which we believe provide a significant amount of earnings support to [Alcoa]’s primary aluminum smelting operations," the firm writes.
- The firm upgrades AA shares to Overweight from Neutral with a $15 price target, up from $9, and raises Century Aluminum (CENX +5.3%) to Overweight from Underweight with a $13 target, up from $6.
- Also: AWC +5.5%, KALU +0.5%, ACH +0.2%, NOR +4.5%.
AA vs. ETF Alternatives
Alcoa Inc manufactures and engineers lightweight metals. It products include aluminum, titanium, and nickel, which are used in aircraft, automobiles, commercial transportation, packaging, oil and gas, defense and industrial applications, among others.
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