Analysts' Focus On Alcoa Shifts Away From Company Split, Back To Earnings

On Wednesday, market attention was drawn to news revolving around Alcoa Inc AA filing forms with the SEC to split into two companies. Credit Suisse analysts said in a research note Friday the market seemed nonplussed about the news in terms of the stock’s performance.

The capital structure raised some eyebrows, as Alcoa will make more concessions to the split off company, named Arconic. These concessions limit upside to the split for Alcoa, and in Credit Suisse’s view, free cash flow will be be reduced as a result.

Looking past the headlines to "the how" of how the move will affect the company’s upcoming earnings, Credit Suisse increased the firm's second-quarter earnings per share forecast to $0.10, and the full-year EPS estimate to $0.38. The analysts' sum-of-the-parts valuation remains unchanged, and Credit Suisse continue to see Alcoa shares as undervalued.