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Aluminium giant Alcoa Inc. (NYSE: AA) kicked off the earnings season on Monday and reported its fourth-quarter earnings as $0.33 in earnings per share and $6.38 bln in revenue. This represented an increase in EPS of $0.29 and a 14% growth in revenue from the previous year, above consensus estimates of $0.25 and $5.99 bln.
Alcoa projected a strong year for global aerospace sales – to increase 9% to 10%. Automotive production and sales are also expected to rise in the range of 2% to 4%, driven by replacement demand and low lending rates in North America. The company also projects that global aluminium demand will grow 7% in 2015, compared to what it had grown in 2014.
“As we built out our value-add businesses, we gained profitable share across exciting downstream growth markets and captured aerospace and automotive growth in the midstream,” explained Alcoa Chairman and CEO Klaus Kleinfeld, commenting on the year.
“On the commodity side, our hard work reshaping the portfolio continues to pay off with improved performance for the 13th quarter in a row. In 2014, we delivered Alcoa’s strongest operating results since 2008; we enter 2015 on solid footing, poised to continue transforming and growing.”
The most recent analyst call was Nomura upgrading Alcoa to a Buy rating from Neutral and raising its price target to $23 from $15. There are a few things about this upgrade to consider. First, it has an implied upside of 42.2% from Monday’s close. Also, this analyst call came out the day earnings were released, signaling some strong optimism. Nomura’s target was short of the highest analyst price target of $25.50, which implied an upside of 57.7%.
Shares of Alcoa closed Monday up 0.4% at $16.17. Following the release of the earnings report, shares were up over 1% at $16.36 in post market trading.
The company’s stock has a consensus analyst price target of $18.72 and a 52-week trading range of $10.05 to $17.75. Alcoa’s market cap is $19 bln.