After a 47% move higher in the stock since October 1,
this former US bellwether has zoomed to life.
Today, with an upgrade by JPM to (only) Neutral and a $15
price target, the stock is +7%.
To show you just how divided the investment world is on
), last Thursday Macquarie slapped a $5 target and an
Underperform on the stock.
What gives? Why is JPM so excited: First, their global
commodity team has said they see a tightening of excess
surplus in the metal itself.
This tightening is being expressed in premiums which are
moving higher in recent weeks. JPM is raising their 2014 EPS
forecast massively from $0.40 to $0.78. If their
business becomes more profitable, the stock can run as they
continue to move into higher specialty metals.
Meanwhile, revenue hasn't moved higher since 2011 and
isn't expected to grow in 2014 at current prices.
Alcoa, who earns more than 48% of their revenue globally, has
devoted significant expertise to the "Engineered Solutions"
segment which has higher profit margins, as the core
aluminum business remains oversupplied and lacking a major
catalyst on demand.
Yes, aircraft and auto demand is picking up and has fully
recovered from the crisis, but the world still has too much
aluminum. Supply discipline needs to remain in force.
The stock remains expensive on P/E but modest on P/B measures.
Around $12.40 the stock has multi-year resistance but
the long term chart looks impressive.