On Wednesday, B.Riley adjusted its price target on Alcoa Corporation (NYSE:AA) shares, increasing it to $31.00 from the previous $25.00, while keeping a Neutral rating on the stock.
The revision followed Alcoa's first-quarter earnings report, which revealed an adjusted EBITDA of $132 million. This figure surpassed B.Riley's forecast of $80 million and the FactSet consensus of $112 million.
Alcoa's performance in the first quarter was buoyed by robust aluminum shipments, which totaled 643 thousand metric tons, outperforming B.Riley's estimate of 576 thousand metric tons. Additionally, third-party alumina shipments exceeded expectations, with 2.397 million metric tons shipped compared to the predicted 1.959 million metric tons.
The company has commenced the sale process for its San Ciprian facility, with the expectation that the bidding will conclude by June. While the costs associated with potential curtailment or closure of the facility were not discussed in detail, Alcoa's management emphasized that difficult decisions would be necessary if the sale does not go through or if the company cannot ensure long-term viability.
Despite facing mechanical challenges and delays in acquiring the necessary technical expertise, Alcoa remains committed to restarting the Alumar project, considering it strategically beneficial.
The market's response to Alcoa's situation appears optimistic, as demand for aluminum has seen an uptick in various sectors, with the exception of European construction.
However, B.Riley suggests that investor attention may center on Alcoa's potential strategic moves to optimize its operational footprint throughout the industry cycle. The revised estimates are partly due to higher London Metal Exchange (LME) pricing, which contributed to the decision to raise the price target on Alcoa shares.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.