Morgan Stanley Reaffirms "Overweight" Rating for Alcoa (NYSE:AA)

Key Points

• Morgan Stanley reiterated an “overweight” rating on Alcoa and set a $79 price target, implying about 66.6% upside from the prior close.
• Other analysts remain mixed: BMO Capital Markets lifted its target to $75, UBS cut its target to $68, and the broader consensus is currently “Hold” with an average target of $67.82.
• Alcoa’s stock fell sharply to $47.41 after the company recently missed Q1 earnings and revenue estimates, even as investors weigh a major $4.1 billion acquisition of South32 assets that could expand its aluminum business.

Alcoa (NYSE:AA - Get Free Report)'s stock had its "overweight" rating restated by Morgan Stanley in a research report issued to clients and investors on Wednesday,Benzinga reports. They currently have a $79.00 target price on the industrial products company's stock. Morgan Stanley's target price would suggest a potential upside of 66.64% from the stock's previous close.

A number of other brokerages also recently weighed in on AA. BMO Capital Markets boosted their target price on shares of Alcoa from $65.00 to $75.00 and gave the stock a "market perform" rating in a research note on Thursday, April 9th. Weiss Ratings raised shares of Alcoa from a "hold (c)" rating to a "hold (c+)" rating in a research note on Wednesday, June 17th. Zacks Research lowered shares of Alcoa from a "strong-buy" rating to a "hold" rating in a report on Tuesday, May 12th. UBS Group dropped their price objective on shares of Alcoa from $80.00 to $68.00 and set a "buy" rating for the company in a research report on Tuesday. Finally, Argus set a $73.00 price objective on Alcoa in a report on Monday, April 27th. Six analysts have rated the stock with a Buy rating, four have assigned a Hold rating and one has issued a Sell rating to the company. According to MarketBeat, the stock has an average rating of "Hold" and a consensus price target of $67.82.

Alcoa Price Performance

AA traded down $4.73 during trading on Wednesday, hitting $47.41. The company's stock had a trading volume of 9,507,877 shares, compared to its average volume of 6,401,102. The company has a quick ratio of 0.88, a current ratio of 1.48 and a debt-to-equity ratio of 0.36. The stock has a market capitalization of $12.51 billion, a price-to-earnings ratio of 11.98 and a beta of 1.56. The firm's 50 day moving average price is $66.01 and its two-hundred day moving average price is $62.72. Alcoa has a 12 month low of $28.11 and a 12 month high of $84.38.

Alcoa (NYSE:AA - Get Free Report) last announced its earnings results on Thursday, April 16th. The industrial products company reported $1.40 earnings per share for the quarter, missing analysts' consensus estimates of $1.60 by ($0.20). The business had revenue of $3.19 billion during the quarter, compared to analyst estimates of $3.35 billion. Alcoa had a net margin of 8.27% and a return on equity of 12.57%. The business's quarterly revenue was down 5.2% compared to the same quarter last year. During the same quarter last year, the business posted $2.15 earnings per share. Sell-side analysts forecast that Alcoa will post 7.54 earnings per share for the current fiscal year.

Institutional Investors Weigh In On Alcoa

Institutional investors have recently modified their holdings of the business. Empowered Funds LLC raised its stake in shares of Alcoa by 64.6% during the first quarter. Empowered Funds LLC now owns 118,039 shares of the industrial products company's stock worth $7,830,000 after buying an additional 46,332 shares during the last quarter. Lombard Odier Asset Management Europe Ltd grew its holdings in Alcoa by 90.9% during the 1st quarter. Lombard Odier Asset Management Europe Ltd now owns 90,258 shares of the industrial products company's stock worth $5,987,000 after acquiring an additional 42,979 shares during the period. Parallel Advisors LLC grew its holdings in Alcoa by 40.2% during the 1st quarter. Parallel Advisors LLC now owns 4,677 shares of the industrial products company's stock worth $310,000 after acquiring an additional 1,340 shares during the period. NewEdge Advisors LLC raised its position in shares of Alcoa by 19.7% during the 1st quarter. NewEdge Advisors LLC now owns 8,788 shares of the industrial products company's stock valued at $583,000 after acquiring an additional 1,446 shares during the last quarter. Finally, Cozad Asset Management Inc. raised its position in shares of Alcoa by 3.8% during the 1st quarter. Cozad Asset Management Inc. now owns 136,075 shares of the industrial products company's stock valued at $9,026,000 after acquiring an additional 4,925 shares during the last quarter.

Key Alcoa News

Here are the key news stories impacting Alcoa this week:

• Positive Sentiment: Alcoa announced a major acquisition of South32’s bauxite, alumina, and aluminum assets for about $4.1 billion upfront, a move that expands its upstream footprint and could strengthen its long-term position in aluminum production. Article Title
• Positive Sentiment: Citi reiterated a Buy rating on Alcoa and kept its $76 price target, saying the acquisition could drive upside if the integration goes well. Article Title
• Neutral Sentiment: Media coverage highlighted Alcoa as one of the key stock movers before the open, but broader market weakness and a pullback in technology shares were also weighing on sentiment overall. Article Title
• Negative Sentiment: Investors may be focused on execution and financing risks from the South32 deal, since the transaction is large and could add integration complexity even if it is strategically attractive.

Alcoa Company Profile

Alcoa Corporation is a global industry leader in the production and management of aluminum, offering an integrated value chain that spans bauxite mining, alumina refining, primary aluminum smelting and the fabrication of value-added products. The company's operations are organized into segments that include raw material extraction, chemical processing and the manufacture of metal mill products and engineered solutions.

Alcoa's product portfolio serves diverse end markets such as aerospace, automotive, packaging, construction, electrical and industrial applications.

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