UBS analyst Matt Murphy trimmed his price target on Alcoa (NYSE: AA) to $11.00 (from $12.00) following results after the close but maintained a Buy rating. Alumina, Engineered Products & Solutions missed the firm's estimates.

Murphy commented, "AA ATOI of $273M was down 33% QOQ and 10% below UBSe. The miss was largely driven by the Alumina segment. EPS segment ATOI of $123M was also below UBSe and down 19% QOQ. Operating cash flow of $865M was slightly above UBSe, however this was offset by higher than expected capex of $398M, meaning AA did not make its $500M FCF target for 2015 ($402M was realized). However, AA did finish the quarter with a large cash balance of $1.9B. Adjusted Q4/15 EPS of $0.04 was slightly above UBSe and consensus. Revenues of $5.2B were slightly below UBSe and down 6% QOQ."

He added, "AA expects GRP Q1/16 ATOI to be flat YOY as the auto sheet volume ramp-up is offset by weakness in packaging and heavy duty trucks. EPS ATOI growth will be 0-2% YOY, suggesting a weak start to 2016 versus expectations. AA noted that Firth Rixson is behind plan due to operational issues. TCS ATOI will be up 0-3% YOY. Upstream ATOI should be relatively flat QOQ. AA established new productivity and margin improvement targets for 2016 of $650M in Value-Add and $600M in Upstream. 2016 capex guidance of $1.4B is well above UBSe of $1.1B and 2015 of $1.2B. AA did not provide a FCF goal for 2016 as it noted volatile markets and potential costs related to the company's split have made providing guidance difficult. The pension contribution requirement will drop from $470M in 2015 to ~$300M in 2016."

The firm reduced 2016 EPS based on the weaker guidance

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Shares of Alcoa closed at $8.00 yesterday.