Validea David Dreman Strategy Daily Upgrade Report - 4/18/2025
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Apr 01 2025
0mins
Source: NASDAQ.COM
Validea's Contrarian Investor Model: The model, based on David Dreman's strategy, has upgraded Alcoa Corp (AA) from a 36% to a 76% rating due to improving fundamentals and stock valuation, indicating growing interest in the company.
Company Overview: Alcoa Corporation operates in the aluminum industry with two main segments—Alumina and Aluminum—engaging in bauxite mining, alumina refining, and aluminum production across multiple countries.
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Analyst Views on AA
Wall Street analysts forecast AA stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for AA is 46.00 USD with a low forecast of 33.00 USD and a high forecast of 58.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
10 Analyst Rating
6 Buy
2 Hold
2 Sell
Moderate Buy
Current: 60.640
Low
33.00
Averages
46.00
High
58.00
Current: 60.640
Low
33.00
Averages
46.00
High
58.00
About AA
Alcoa Corporation is a vertically integrated aluminum company comprised of bauxite mining, alumina refining, aluminum production (smelting and casting), and energy generation. The Company’s operations are comprised of two business segments: Alumina and Aluminum. The Alumina segment primarily consists of its bauxite mines and alumina refineries, which generally include the mining of bauxite and other aluminous ores, as well as the refining, production, and sale of smelter grade and non-metallurgical alumina. The alumina produced by this segment is sold to internal and external aluminum smelter customers; a portion of the alumina is sold to external customers who process it into industrial chemical products. The Aluminum segment consists of the Company’s aluminum smelting and casting operations along with the Company’s energy production assets in Brazil, Canada, and the United States. It has direct and indirect ownership of 26 operating locations across nine countries on six continents.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Aluminum Prices Surge to Four-Year High as Dollar Weakens
- Aluminum Price Surge: Aluminum futures on the London Metal Exchange rose 2.3% to $3,387 per metric ton, marking a nearly four-year high, reflecting strong demand for base metals and bullish investor sentiment.
- Dollar Weakness Impact: Trump's comments expressing indifference towards the dollar's decline intensified bearish sentiment in the market, leading to price increases in aluminum and other base metals, with copper up 1.5% and zinc up 1.9%.
- Goldman Sachs Upgrades Outlook: Goldman Sachs raised its aluminum price forecast for H1 2023 from $2,575 to $3,150 per ton, although still below current prices, indicating strong confidence in the aluminum market and sustained investor optimism.
- Supply and Demand Dynamics: Low global aluminum inventories and concerns over power availability for new Indonesian smelters, coupled with rising demand from electric vehicles and grid requirements, have supported the price rally, despite Goldman forecasting a drop to $2,400 per ton in the future.
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Alcoa Stock Rises Despite Downgrade by Morgan Stanley
- Rating Downgrade: Morgan Stanley downgraded Alcoa (AA) from Overweight to Equal Weight with a $64 price target, citing a more balanced risk-reward after the stock's nearly 50% rise since December 1.
- Productivity Initiatives: Alcoa is implementing several measures to enhance productivity, reduce costs, and optimize its asset portfolio, while also expecting $50M-$60M annually in IRA production tax credits for U.S. aluminum, bolstering profitability.
- Market Conditions: A tighter aluminum market is expected to sustain profitability, with U.S. regional premiums reflecting a 50% tariff; Alcoa has identified 10 high-priority curtailed sites for potential conversion to hyperscale data centers.
- Transaction Delays: The timeline for transforming curtailed sites into data centers continues to be pushed back, and escalating trade tensions between the U.S. and Canada suggest that obtaining a Section 232 exemption for Canadian aluminum may become more challenging.
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