Jefferies Comments on Alcoa (AA) Following Q4 Numbers; Sees Upside, Bullish on Aluminum Prices
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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 kept its Buy rating and $12 price target on Alcoa (NYSE: AA), but issued comments on Alcoa's fourth-quarter results.
Despite the lukewarm numbers, Jefferies sees upside for Alcoa moving forward.
Also, global production cuts came in-line with their expectations, commenting, "The trade press is reporting over 625,000 tonnes of high cost capacity in China has closed in recent weeks because of negative cash margins. And, the aluminum price has rallied about 6% in the past three weeks. We believe further production cuts are likely as the aluminum price is trading below the marginal cost of production. Our 2012 aluminum price forecast is $1.05 vs. the current price of $0.93."
Despite the bullish outlook, Jefferies thinks further, large gains for aluminum might not be in the works. The firm notes aggressive new supply builds, and aluminum's price elasticity as an "underappreciated constraint" on price appreciation.
Finally, Jefferies thinks Alcoa's management seeing a supply deficit in 2012 is more optimistic than their views, but they believe it is possible at current low prices as both production and consumption respond.
For an analyst ratings summary and ratings history on Alcoa click here. For more ratings news on Alcoa click here.
Shares of Alcoa closed at $9.43 yesterday.
Despite the lukewarm numbers, Jefferies sees upside for Alcoa moving forward.
Also, global production cuts came in-line with their expectations, commenting, "The trade press is reporting over 625,000 tonnes of high cost capacity in China has closed in recent weeks because of negative cash margins. And, the aluminum price has rallied about 6% in the past three weeks. We believe further production cuts are likely as the aluminum price is trading below the marginal cost of production. Our 2012 aluminum price forecast is $1.05 vs. the current price of $0.93."
Despite the bullish outlook, Jefferies thinks further, large gains for aluminum might not be in the works. The firm notes aggressive new supply builds, and aluminum's price elasticity as an "underappreciated constraint" on price appreciation.
Finally, Jefferies thinks Alcoa's management seeing a supply deficit in 2012 is more optimistic than their views, but they believe it is possible at current low prices as both production and consumption respond.
For an analyst ratings summary and ratings history on Alcoa click here. For more ratings news on Alcoa click here.
Shares of Alcoa closed at $9.43 yesterday.
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