Morgan Stanley Overweight On Alcoa (AA)

Morgan Stanley has an Overweight rating and a $22 price target on shares of Alcoa AA after the investment bank met with the company's CFO. In a note to investors, Morgan Stanley writes, "We met with Charles McLain, CFO of Alcoa. AA has been increasing its focus on midstream and downstream segments, where profitability is less linked to aluminum price. Improved performance from these segments, driven by higher operating rates and improved product mix, may prove our mid-cycle earnings estimate conservative. We highlight our thoughts about the segments post the meetings below." Morgan Stanley goes on to say, "We have an Overweight rating on Alcoa shares with a price target of $22 per share. Our price target is based on 12x normalized earnings potential at $1.80. We see higher linkage rate for Alumina and long-term earnings potential in midstream and downstream assets not reflected in the current stock price." Shares of AA are up 11 cents in pre-market trading to $17.12, a gain of 0.65%.