Long-Term Buy Recommendation for Alcoa Amid Current Challenges and Potential Economic Slowdown

Analyst Chris LaFemina of Jefferies maintained a Buy rating on Alcoa (AA – Research Report), reducing the price target to $30.00.

Chris LaFemina has given his Buy rating due to a combination of factors that suggest potential long-term value in Alcoa’s stock despite current challenges. Although the company’s earnings and EBITDA estimates have been significantly lowered, LaFemina believes that the current valuation of Alcoa shares already accounts for the risks associated with a potential global economic slowdown.
LaFemina anticipates that Alcoa’s free cash flow will improve in the near term as working capital builds are partially reversed, which should help reduce net debt and positively impact equity valuation. Furthermore, he notes that historically, share price recovery in the metals and mining sector often precedes economic recovery. Thus, he recommends buying Alcoa shares for the long term and suggests adding to positions during periods of market weakness.

In another report released on April 21, Morgan Stanley also maintained a Buy rating on the stock with a $35.00 price target.