BofA/Merrill Lynch Timna Tanners reiterated a Neutral rating and $16 price target on Alcoa (NYSE: AA) following the company's Q2 'beat' which was driven by higher than normal power sales within Primary Metal.

The firm is raising 2014E EPS to $0.60 from $0.50 largely to factor in the beat on potential for further power sales at non-producing sites, which they note have historically been erratic and can be tough to model.

The firm's $16 PO uses 8.5x 2015E EV/EBITDA and adds a $1/shr for the Firth Rixson acquisition, in line with a 10-yr avg of 8.8x and a 3-yr avg 7.4x multiple.

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Shares of Alcoa closed at $14.85 yesterday.