In a report released on June 20, Carlos De Alba from Morgan Stanley maintained a Buy rating on Alcoa (AA – Research Report), with a price target of $37.50.
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Carlos De Alba has given his Buy rating due to a combination of factors including Alcoa’s strategic initiatives to enhance productivity and reduce costs, as well as the optimization of its asset portfolio. Additionally, the company is expected to benefit from IRA production tax credits for aluminum production in the US, which could amount to $50-60 million annually.
Furthermore, despite the challenges posed by new US tariff policies and volatility in alumina prices, a tighter aluminum market is anticipated to sustain profitability. This financial stability should enable Alcoa to efficiently manage its debt from the acquisition of Alumina Ltd. and potentially enhance shareholder returns. The valuation approach, using an EV/EBITDA multiple that is slightly below the historical average, reflects these strategic and market considerations.