JP Morgan Raises Estimates On Alcoa To Anticipate Higher Aluminum Prices

JP Morgan has published a research report on Alcoa Inc. AA and is raising estimates and price target based on a higher aluminum forecast as aluminum prices are starting to increase. In the report, JP Morgan writes "We are increasing our 2011E EPS to $1.55 from $1.38 and our price target to $22 from $20, largely to reflect our metal strategist's higher 2011 aluminum price forecast, which is moving to $1.10/lb from $1.06/lb. We think AA's strategy of exiting underperforming businesses, focusing on low-cost operations, and attacking its cost structure are all starting to increase the company's leverage to the underlying aluminum price. We expect earnings to gradually increase throughout this year, as these efforts continue to pay off amidst strong aluminum prices, and think the stock could benefit from some multiple expansion as investors become more convinced of their sustainability and ability to drive earnings higher." JP Morgan maintains its Overweight rating and has raised the price target from $20 to $22. Alcoa, Inc. closed yesterday at $16.49.