BofA Securities raises Alcoa stock price target to $27 on Q2 earnings

Investing.com - BofA Securities has raised its price target on Alcoa (NYSE:AA) to $27.00 from $26.00 while maintaining an Underperform rating on the aluminum producer’s stock. The stock currently trades at $28.56, with a P/E ratio of 7.9x. According to InvestingPro analysis, Alcoa appears undervalued based on its Fair Value estimate.

The price target adjustment follows Alcoa’s second-quarter 2025 results, which showed adjusted EBITDA of $313 million, exceeding BofA’s estimate of $278 million and Bloomberg consensus of $292 million. The earnings were largely in line with Visible Alpha consensus of $311 million. With a beta of 2.25, InvestingPro data shows the stock has exhibited significant volatility, while maintaining a "GOOD" overall financial health score.

BofA attributed the earnings beat to higher Aluminum segment EBITDA, likely resulting from lower energy costs and improved product mix. For the third quarter of 2025, Alcoa has guided to a $30 million quarter-over-quarter benefit, net of tariffs.

The investment bank’s decision to raise its price objective stems from mark-to-market adjustments to commodity prices and higher 2025 earnings estimates. Despite the price target increase, BofA maintained its Underperform rating due to ongoing uncertainty related to Section 232 tariffs on Canadian shipments.

BofA also cited concerns about ramp-up issues at Alcoa’s loss-making San Ciprián operations and noted that the company has flagged a permitting delay for its Australian bauxite mines.

In other recent news, Alcoa Corporation reported its second-quarter 2025 financial results, surpassing analysts’ expectations. The company achieved an adjusted earnings per share (EPS) of $0.39, exceeding the forecasted $0.33, and reported revenue of $3.02 billion, outperforming the anticipated $2.91 billion. This marks a significant achievement for Alcoa, reflecting its ability to navigate market challenges effectively. Additionally, Alcoa completed significant sales and agreements, enhancing its market position. The company also announced a strategic focus on sustainable aluminum solutions and operational competitiveness. During the quarter, Alcoa faced challenges such as ongoing tariff costs, which could affect profitability, and operational delays, particularly with the San Ciprian smelter restart. Despite these hurdles, Alcoa remains committed to engaging with governments to mitigate tariff impacts and anticipates aluminum shipments between 2.5 and 2.6 million metric tons for the upcoming quarters.

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