“Alcoa Analysis: Buy Rating, Price Target & Low-Carbon Competitiveness”

[이데일리 유재희 기자] For aluminum manufacturer Alcoa (AA), there is an analysis that it is necessary to ‘buy’ considering the possibility of aluminum price increase, high defense against economic recession, and low-carbon competitiveness.

According to CNBC, an American economic media outlet, on the 8th (local time), JP Morgan analyst Bill Peterson initiated coverage of Alcoa with an investment recommendation of ‘Overweight’ and a target of $54.

Alcoa shares closed the day at $36.82, up 1.9% from the previous day. According to Bill Peterson’s analysis, it means that there is room for an additional 47% increase in the future.

Founded in 1886, Alcoa is an aluminum product manufacturer that covers the entire value chain, from mining borgite, a raw material for aluminum (2nd in the world in terms of mining), alumina refined from it (1st in the world), and aluminum products made by refining alumina. are building

Since last year, Alcoa has been sluggish in both earnings and stock prices in the aftermath of falling aluminum prices. The first quarter sales announced on the 19th of last month also fell 19% year-on-year to $2.67 billion, falling below expectations of $2.76 billion, and adjusted earnings per share (EPS) was -0.23 dollars, continuing a loss for three consecutive quarters. It fell far short of market expectations of -0.03 dollars. Its share price also fell 24% last year and continues to decline 19% this year.

“Given the emerging aluminum supply shortage and the strong long-term growth trend for the commodity, we are optimistic about the outlook for aluminum prices,” said Bill Peterson. It is analyzed that this will eventually have a positive impact on Alcoa’s earnings and stock price. Earlier in February, Citigroup also raised its target price for Alcoa from $55 to $65, expecting an increase in aluminum prices. This is currently the highest Wall Street price target.

Bill Peterson also said, “We improved the pension related system (defined benefit retirement pension for Canadian retirees, etc.), which has been a volatile factor in Alcoa’s financial statements, to improve financial stability. ” was judged.

It was also noted that it is a company optimized for the ‘greening’ trend. Bill Peterson predicted, “Aluminum will play a key role in the energy transition with its recyclability and light weight.” Alcoa has already launched the ‘Sustana’ brand, a low-carbon product, and is highly evaluated for its eco-friendliness. Bill Peterson’s analysis is that as the commercialization of the Elesis process begins next year, it will be differentiated in terms of carbon efficiency.

Elesis is a joint venture established in 2018 through a partnership between Alcoa and Rio Tinto. Elesis technology is a patented technology that allows oxygen, not carbon, to be emitted during the smelting process, and licensing for this technology will begin next year.

Meanwhile, a total of 14 analysts gave an investment opinion on Alcoa on Wall Street, and 7 of them (50%) maintain a buy opinion. The average target price is $50.2, which is 36.2% higher than the closing price on the day.