Alcoa stock has been upgraded on the outlook for strong profitability and alumina storms, said B. Riley By Investing.com
On Thursday, B. Riley was upgraded Alcoa Corp (NYSE: NYSE: ) stock from Neutral to Buy, raising the price target from $41 to $50. The decision follows Alcoa's successful implementation of profit-saving initiatives and higher profitable alumina prices.
The company's third-quarter results showed adjusted EBITDA of $455 million, beating both the B.Riley estimate of $383 million and the FactSet consensus of $386 million.
The company also revised up its forecast for Alcoa's 2025 adjusted EBITDA, raising the estimate from $1,764 million to $2,412 million. This review suggests a 2025 free cash flow from equity (FCFE) of $983 million, which would represent a yield of approximately 9%. The positive outlook is a reflection of Alcoa's strong financial performance and continued growth expectations.
In addition to the positive long-term outlook, B.Riley revised its fourth-quarter adjusted EBITDA estimate for Alcoa up from $413 million to $563 million. This adjustment reflects a strong end to the year and sets a positive tone for the company's performance in 2025.
The development and targeted price increases are proof of Alcoa's effective strategy and its ability to capitalize on current market conditions. The analyst's comments highlight the company's progress in implementing its profitability plans as well as the benefits derived from the current pricing environment for its products.
Investors may view this development as a sign of confidence in Alcoa's financial health and its potential for continued success. Raised estimates and positive revisions to future earnings reflect the analyst's belief in the company's value and growth prospects.
In other recent news, Alcoa Corporation reported strong performance in the third quarter of 2024, with revenue rising to $90 million, which is a significant increase from $20 million in the previous quarter. The company's adjusted EBITDA also increased significantly, reaching $455 million.
A notable development was the successful completion of the acquisition of Alumina (OTC:) Limited, which is expected to improve Alcoa's market position. In strategic moves, Alcoa plans to sell its 25.1% stake in joint ventures in Ma'aden and has entered into a partnership with IGNIS Group for its Spanish operations.
These recent developments highlight Alcoa's proactive approach to improving market conditions and strategic plans. The company raised its Q4 alumina shipment outlook to 12.9-13.1 million tons, reflecting optimism about market conditions for alumina and aluminum. However, challenges in the building and construction sector and slow growth in the automotive industry have been noted.
On the financial side, Alcoa intends to reduce its adjusted debt of $ 2.2 billion, focusing on production and strategic plans for future growth. The company is also working to secure Western Australian mining permits in early 2026, with operations likely to begin in 2027.
InvestingPro Insights
B.Riley's recent development of Alcoa Corp (NYSE: AA ) is accompanied by several key metrics and insights from InvestingPro. The company's market capitalization reaches $10.87 billion, indicating its significant presence in the aluminum industry. Alcoa shares have shown strong performance, with a total return of 53.57% over the past year and a return of 23.84% over the past month, indicating positive momentum supporting B.Riley's bullish stance.
InvestingPro Tips highlights that Alcoa's revenue is expected to grow this year, consistent with B.Riley's rising EBITDA estimates for 2025. Additionally, analysts predict that the company will be profitable this year, in line with the improved outlook. However, it should be noted that Alcoa is currently operating with a limited level of debt and has not been profitable in the past twelve months, which investors should consider and good guesswork.
The company's revenue for the past twelve months was $10.7 billion, a slight decrease of 1.53% year over year. However, quarterly revenue growth of 8.27% suggests a potential turnaround, supporting B.Riley's optimistic view of Alcoa's future performance.
For investors looking for a comprehensive analysis, InvestingPro offers 11 additional tips on Alcoa, providing a deeper understanding of the company's financial health and market conditions.
This article was created with the support of AI and reviewed by an editor. For more information see our T&C.
