Alcoa’s Growth Potential and Strategic Initiatives Justify Buy Rating Despite Current Challenges

Chris LaFemina, an analyst from Jefferies, reiterated the Buy rating on Alcoa (AA – Research Report). The associated price target was lowered to $43.00.

Chris LaFemina has given his Buy rating due to a combination of factors that highlight Alcoa’s potential for future growth despite some current challenges. The company reported a strong first-quarter EBITDA of $855 million, surpassing expectations and reflecting a significant portion of the annual consensus forecast. This performance indicates robust operational progress, although it was somewhat offset by a seasonal working capital build that impacted free cash flow.
Despite the negative impact of 232 tariffs and challenges at the San Ciprian smelter, Alcoa’s strategic initiatives, such as the planned sale of the Ma’aden joint venture, are expected to improve its financial position. The company’s focus on reducing net debt and potential for significant capital returns once debt targets are achieved further support the Buy rating. Additionally, Alcoa’s current valuation appears attractive, trading at a relatively low EV/EBITDA multiple, suggesting upside potential for investors willing to be patient.

According to TipRanks, LaFemina is a 4-star analyst with an average return of 3.0% and a 45.42% success rate. LaFemina covers the Basic Materials sector, focusing on stocks such as Freeport-McMoRan, Nucor, and Steel Dynamics.

In another report released on April 15, UBS also maintained a Buy rating on the stock with a $32.00 price target.