Alcoa Estimates Go Higher At Goldman

The base and bulk price decks for commodities have been raised, since some price rallies are expected to be “more sustainable than others,” Goldman Sachs’ Andrew Quail said in a report. He maintains a Neutral rating on Alcoa Corporation AA, while raising the price target from $23 to $27, which still reflects 8 percent downside.

Commodities

The coking coal price forecasts for 2017 have been raised by an average of 100 percent, from the earlier estimate of $135 per ton to $274 per ton. The increase is based on predication of “prolonged tightness in the global seaborne market,” Quail mentioned. The copper price forecast for 2017 and 2018 have been raised by 13 percent and 10 percent, respectively.

The aluminum price forecast for 2017 has been raised from $1,600 per ton to $1,645 per ton.

Company Estimates Raised

The EBITDA estimates for 2016 and 2017 have been raised from $1,174 million to $1,263 million and from $1,408 million to $1,624 million, respectively. The EPS estimates for 2016 and 2017 have been raised from -$0.02 to $0.24 and from $1.07 to $1.66, respectively.

Quail highlighted the risks to the estimates as “higher (lower) commodity prices, operational disruptions at key assets, or a change in capital allocation strategy.”

In the pre-market, Alcoa was seen down 1.92 percent at $29.05.