Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 9 May, 25 | AA | Buy | USD 25.72 | USD 27.01 | USD 29.2 | 3 days | 13.5% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
Alcoa Corporation, together with its subsidiaries, produces and sells bauxite, alumina, and aluminum products in the United States, Spain, Australia, Iceland, Norway, Brazil, Canada, and internationally. The company operates through three segments: Bauxite, Alumina, and Aluminum. It engages in bauxite mining operations; and processes bauxite into alumina and sells it to customers who process it into industrial chemical products, as well as aluminum smelting and casting businesses. The company offers primary aluminum in the form of alloy ingot or value-add ingot to customers that produce products for the transportation, building and construction, packaging, wire, and other industrial markets. In addition, it owns hydro power plants that generates and sells electricity in the wholesale market to traders, large industrial consumers, distribution companies, and other generation companies. The company was formerly known as Alcoa Upstream Corporation and changed its name to Alcoa Corporation in October 2016. The company was founded in 1886 and is headquartered in Pittsburgh, Pennsylvania.
Adjusted EBITDA rose 26% quarter-over-quarter, from $677 million to $855 million
Net income increased 171% sequentially to $548 million in Q1 2025 from $202 million in Q4 2024
Alumina shipments dropped 8% sequentially, primarily due to shipment timing and decreased trading activity
Total revenue declined 3% sequentially, falling from $3.49 billion in Q4 2024 to $3.37 billion in Q1 2025
Alcoa is exposed to regulatory and geopolitical risks, particularly from trade tariffs such as U.S. Section 232, which can significantly impact input costs, margins, and global competitiveness
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 25.72 | 22.5 | 27.01 | 29.2 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Financial Performance Overview: In the first quarter of 2025, Alcoa Corporation reported revenue of $3.37 billion, a slight decline of 3% from the prior quarter but an increase of 30% year-over-year. Net income attributable to Alcoa was $548 million, or $2.07 per share, marking a substantial 171% increase compared to $202 million in the fourth quarter of 2024. On an adjusted basis, net income rose to $568 million, or $2.15 per share, up 106% sequentially. Adjusted EBITDA excluding special items reached $855 million, a 26% increase from the previous quarter, primarily driven by improved aluminum prices and favorable alumina costs.
Operational Insights and Production Trends: Alumina production declined 1% sequentially to 2.35 million metric tons, while aluminum production also decreased 1% to 564,000 metric tons, largely due to the shorter reporting period. Shipments in both segments were down—alumina by 8% and aluminum by 5%—primarily due to timing factors and the absence of Ma’aden offtake volumes. Nonetheless, higher bauxite volumes and pricing from offtake and supply agreements helped offset part of the revenue loss.
Segmental Revenue Drivers and Tariff Impacts: Segment-level revenue was mixed. Alumina revenue fell 8% sequentially due to lower shipment volumes, adverse currency movements, and lower realized prices. In contrast, aluminum segment revenue remained flat, supported by higher realized prices despite lower shipment volumes. Tariff costs had a direct impact on profitability, with $20 million incurred during the quarter due to the reimposition of a 25% tariff under U.S. Section 232 on Canadian aluminum imports, effective March 12, 2025.
Strategic Initiatives and Capital Management: Alcoa made strategic progress by forming a joint venture with IGNIS Equity Holdings, SL to support operations at the San Ciprián complex in Spain. Under the agreement, Alcoa holds a 75% stake and contributed $81 million, with IGNIS EQT holding 25% and contributing $27 million. This JV enables a planned restart of the smelter in 2025. Additionally, Alcoa completed a significant debt repositioning, issuing $1 billion in new senior notes and using $890 million of the proceeds to retire existing higher-cost debt, improving its debt maturity profile.
Cash Position and Working Capital Movement: Alcoa ended Q1 2025 with a robust cash balance of $1.2 billion. However, cash flow from operations was modest at $75 million, while investing activities used $108 million, mainly for capital expenditures. Working capital increased, with Days Working Capital (DWC) rising by 13 days to 47 days due to inventory buildup in the Alumina segment and reduced accounts payable stemming from lower alumina trading activity.
Outlook and Forward-Looking Statements: For full-year 2025, Alcoa expects no changes in previously projected alumina and aluminum production or shipment ranges. Second quarter expectations include sustained strong performance in the Alumina segment, though the Aluminum segment is anticipated to face $90 million in additional tariff costs and $15 million in smelter restart expenses. Alumina costs are expected to be favorable by $165 million. Other expenses may increase by $10 million due to equity investment losses, while operational tax benefits are forecasted at $50 million to $60 million, subject to market conditions.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Alcoa Corporation (NYSE: AA) at the closing market price of USD 25.72, as on May 08, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Basic Materials Industry: Aluminum
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| AA Alcoa Corp |
0.23 0.80% | 29.02 | - | 12.02 | 0.52 | 1.21 | 0.60 | -244.3909 |
| ALMMF Aluminum Corporation of China Limited |
- -% | 0.58 | 7.88 | 11.48 | 0.08 | 1.16 | 0.76 | 6.68 |
| CHHQF China Hongqiao Group Limited |
- -% | 1.90 | - | 5.91 | 0.11 | 1.14 | 0.96 | 4.62 |
| CHHQY China Hongqiao Group Limited |
- -% | 16.50 | 5.04 | 4.72 | 0.10 | 0.91 | 0.95 | 4.57 |
| NHYKF Norsk Hydro ASA |
- -% | 5.74 | 21.31 | 12.71 | 0.07 | 1.29 | 0.08 | 0.65 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is May 08,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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