Jefferies Cuts PT on Alcoa (AA) 12.5% Following Q3 Results; Says Valuation is Compelling
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Price: $51.85 +2.57%
Rating Summary:
20 Buy, 13 Hold, 1 Sell
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Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
20 Buy, 13 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Jefferies issued comments on Alcoa (NYSE: AA) following it's third-quarter earnings report, released after the market closed Tuesday. The firm maintained its Buy rating, but trimmed its price target 12.5 percent from $16 to $14.
Alcoa reported third-quarter earnings of 14 cents per share, missing views calling for 22 cents per share. Commenting on the results, Jefferies said, "We’d caution against reading too much into Alcoa’s results as it pertains to the broader economy. Many of Alcoa’s challenges have been unique to Alcoa and the aluminum industry. Indeed, we’d argue that Alcoa’s downstream results were actually good. And, we’d concur with management’s observation that near record regional price premiums for aluminum are indicative of continued strong end user demand."
Jefferies believes the Primary Metals Division was the primary disappointment. Growth was there, but lower metals prices hampered results. Jefferies also believes current aluminum prices are at support levels, and sees limited downside to current levels.
Though Jefferies said Alcoa isn't its favorite stock, and disagrees that aluminum prices will go "materially" higher, its current valuation deserves a Buy rating.
Fiscal 2011 EPS moves from $1.11 to 92 cents, while 2012 is lowered from $1.17 to $1.05.
Click here for more color on the quarter, or here for a ratings history.
Alcoa shares are 4 percent lower Wednesday.
Alcoa reported third-quarter earnings of 14 cents per share, missing views calling for 22 cents per share. Commenting on the results, Jefferies said, "We’d caution against reading too much into Alcoa’s results as it pertains to the broader economy. Many of Alcoa’s challenges have been unique to Alcoa and the aluminum industry. Indeed, we’d argue that Alcoa’s downstream results were actually good. And, we’d concur with management’s observation that near record regional price premiums for aluminum are indicative of continued strong end user demand."
Jefferies believes the Primary Metals Division was the primary disappointment. Growth was there, but lower metals prices hampered results. Jefferies also believes current aluminum prices are at support levels, and sees limited downside to current levels.
Though Jefferies said Alcoa isn't its favorite stock, and disagrees that aluminum prices will go "materially" higher, its current valuation deserves a Buy rating.
Fiscal 2011 EPS moves from $1.11 to 92 cents, while 2012 is lowered from $1.17 to $1.05.
Click here for more color on the quarter, or here for a ratings history.
Alcoa shares are 4 percent lower Wednesday.
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