BofA update shows where active managers are putting money
Investing.com - JPMorgan has lowered its price target on Alcoa (NYSE:AA) to $27.00 from $28.00 while maintaining a Neutral rating on the aluminum producer’s stock. The stock, currently trading at $28.56, has experienced significant volatility, with InvestingPro data showing a -9.53% return over the past week. According to InvestingPro’s Fair Value analysis, the stock appears to be undervalued at current levels.
Alcoa reported second-quarter adjusted EBITDA of $313 million, exceeding consensus estimates of $292 million by 7%. The company faced a $95 million incremental hit from higher 50% Section 232 tariffs during the quarter, bringing the total tariff impact to $115 million. Despite challenges, InvestingPro data reveals the company maintains a healthy financial position with a current ratio of 1.71 and a strong Piotroski score of 7.
Looking ahead to the third quarter, Alcoa expects another $90 million incremental impact from tariffs, with the quarterly run-rate impact reaching approximately $215 million. In response, the company has shifted about 100,000 tons of Canadian production to non-U.S. customers and maintains optionality to shift another 185,000 tons.
The company is seeking clarity on potential 50% tariffs on Brazilian imports, which could affect its U.S. alumina sourcing. In Western Australia, access to higher bauxite grades has been delayed until 2028 or beyond due to extended permitting processes, with contingency plans providing only an additional 15-month runway.
Free cash flow turned positive at $357 million in the second quarter, driven by strong working capital release, despite EBITDA headwinds of $542 million quarter-over-quarter primarily from weaker alumina and aluminum pricing. For deeper insights into Alcoa’s financial health and future prospects, InvestingPro subscribers can access comprehensive analysis including additional ProTips and detailed valuation metrics in our exclusive Pro Research Report.
In other recent news, Alcoa Corporation reported second-quarter 2025 earnings that surpassed analysts’ expectations, posting an adjusted earnings per share (EPS) of $0.39, which was higher than the forecasted $0.33. Revenue also exceeded expectations, coming in at $3.02 billion compared to the anticipated $2.91 billion. Citi maintained its Buy rating on Alcoa with a price target of $42, citing solid earnings despite some operational challenges. Meanwhile, BofA Securities raised its price target for Alcoa to $27 from $26, although it maintained an Underperform rating due to concerns about tariffs and operational issues at the San Ciprián operations. Alcoa’s adjusted EBITDA for the quarter was reported at $313 million, surpassing both BofA’s estimate of $278 million and the consensus of $292 million. The company also highlighted its strategic initiatives, including redirecting aluminum production to non-U.S. markets in response to tariffs. Additionally, Alcoa is addressing delays in Western Australia bauxite approvals, which may impact its raw material operations. These developments reflect Alcoa’s efforts to navigate market conditions and operational challenges.
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