Here’s Why Analysts Are Still Bullish On Alcoa Corp (AA) Stock Despite The Selloff

Alcoa Corp (NYSE:AA) is one of the Top 10 Extreme Value Stocks To Buy Now. On July 1, B. Riley reiterated a Buy rating on Alcoa Corp (NYSE:AA) and a price target of $92. This followed the company’s announcement of the acquisition of South32’s bauxite, alumina, and aluminum assets. The firm believes the initial drop in the company’s share price reflects investor concerns about incremental leverage and a preference for short-term shareholder returns, given weak market conditions for alumina.

However, the firm views the selloff as excessive and views the deal more positively over the long term. It expects several benefits, including cost savings from synergies and stronger scale, which could improve AA’s competitiveness. Multiple sources of cash flow, such as asset sales, potential gains from higher metal prices and the sale of its stake in Ma’aden, could offset the additional debt, noted the firm.

photo by scott graham on Unsplash

Earlier on June 25, Timna Tanners of Wells Fargo lowered the firm’s price target on Alcoa Corp (NYSE:AA) from $82 to $71 and kept an Overweight rating on the stock. The downward price target revision reflects a cautious valuation outlook due to recent weakness in aluminum prices. However, Wells Fargo thinks the aluminum price has oversold, retreating to pre-Iran War levels despite extensive physical damage.

Alcoa Corp (NYSE:AA) engages in the bauxite mining, alumina refining, aluminum production, and energy generation business. The company operates through two segments: Alumina and Aluminum.

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