Gold bars to be exempt from tariffs, White House clarifies
Investing.com - Citi has reiterated a Buy rating and $42.00 price target on Alcoa (NYSE:AA) following the aluminum producer’s second-quarter 2025 earnings report. According to InvestingPro data, the stock appears undervalued based on its Fair Value analysis.
Alcoa reported second-quarter EBITDA of $313 million, exceeding consensus estimates of $292 million. The company generated positive free cash flow during the quarter, supported by working capital release. The company maintains healthy financials with a current ratio of 1.71 and an impressive EBITDA of $2.29 billion over the last twelve months.
Regarding tariffs, Alcoa indicated that the net effect is "neutral-to-positive," with gains on U.S. smelters offsetting negative impacts on Canadian smelters. The company has already begun diverting approximately 100,000 tons of aluminum to non-U.S. markets in response to the current Midwest Premium not covering tariffs from Canada.
On a negative note, Citi highlighted that Western Australia bauxite approvals appear to be delayed, presenting a potential challenge for the company’s raw material operations.
Citi expects Alcoa shares to trade in line with the market following these results, balancing the stronger-than-expected earnings against the mixed operational developments.
In other recent news, Alcoa Corporation reported its second-quarter 2025 earnings, surpassing analysts’ expectations with an adjusted earnings per share (EPS) of $0.39, beating the forecasted $0.33. Revenue for the quarter was $3.02 billion, exceeding the anticipated $2.91 billion. The company’s adjusted EBITDA was reported at $313 million, which was higher than both BofA Securities’ estimate of $278 million and Bloomberg’s consensus of $292 million. Despite these positive results, BofA Securities maintained an Underperform rating on Alcoa’s stock, although it raised its price target from $26 to $27 due to adjustments in commodity prices and improved earnings estimates for 2025.
Alcoa’s performance was attributed to higher Aluminum segment EBITDA, resulting from lower energy costs and an improved product mix. However, the company faces ongoing challenges, including Section 232 tariffs on Canadian shipments and operational delays at its San Ciprián operations. The company has also flagged a permitting delay for its Australian bauxite mines. Alcoa anticipates third-quarter tariff costs of approximately $250 million and continues to engage with governments to mitigate these impacts.
The company has been proactive in redirecting portions of its Canadian production to non-U.S. customers to counteract tariff impacts. Alcoa’s strategic focus remains on sustainable aluminum solutions and operational competitiveness, as highlighted by recent sales and agreements that have enhanced its market position.
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