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Alcoa Inc (NYSE:AA) – Maximum Upside Limited To $14.50

Alcoa Inc (NYSE:AA) spent the second consecutive session in the narrow band of $13.30-65 and finally ended the day with a marginal loss of 1.32%. The outlook for the company was changed to positive from stable by Moody’s Investors Service and that change reflected the company’s improving trends in earnings and debt protection metrics as seen by the 3.8XEBIT/Interest ratio for 12 months ended March 31, 2015, against the debt/EBITDA ratio of 3X against the 2X and 4X respectively for the 12 months ended December 31, 2013.

On March 9, 2015 Alcoa Inc (NYSE:AA) announced its intentions to acquire RTI International Metals, Inc. (NYSE:RTI), the Pittsburgh based titanium maker for $1.5 billion. RTI International Metals, Inc. (NYSE:RTI) announced the first quarter result earlier this week, which showed a considerable improvement in its performances with a net income of $4.5 million or $0.15 per share against the loss of $4.2 million or $0.13 per share reported for the first quarter of 2014. The company had a first quarter operating income, excluding the expense of $4.7 million related to the merger of the company with Alcoa, of $16.9 million.


The global bear market seen in the base metals affected Alcoa Inc (NYSE:AA) too. The realized aluminum price of the company saw a decline of 6.1% on a q-o-q basis to $2420/mt in the first quarter of 2015. However, the realized aluminum price increased by 9.8% on a y-o-y basis. The revenue increased to $5.82 billion, an increase of 6.7% on a y-o-y basis but still short of the consensus of $5.94 billion.

Technically, it is still difficult to see any sign of real strength returning for the stock. The trend remains down in all timeframes and the maximum upside looks limited to $14.50 in the best case scenario, which coincides with a strong supply area.

Published by Pamela Garcia

Pamela Garcia is a keen follower of U.S. stock market

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