Macquarie upgrades Alumina to Outperform
Macquarie has upgraded Alumina’s (ASX: AWC) recommendation from neutral to outperform and increased its price target by 35% to $2.30, implying upside of 20% to the company’s current trading range.
Through its ownership of 40% of each of the Alcoa World Alumina and Chemicals (AWAC) entities which form a part of the Alcoa alumina business segment, Alumina is strongly leveraged to movements in the aluminium price.
In response to recent disclosures from Alcoa, Macquarie has made material upgrades to its aluminium price outlook and undertaken a remodelling of its earnings estimates for the group, including the potential for growing bauxite export revenues.
These revisions have resulted in the broker increasing earnings forecasts for calendar years 2017 and 2018 by circa 16%.
Commenting on broader industry conditions, Macquarie said, “We expect buoyant alumina prices to persist for the remainder of this year and potential production curtailments in China next winter present an emerging upside risk to our base case forecasts for alumina prices beyond 2017”.
It should be noted that broker projections and price targets are only estimates and may not be met. Also, historical data in terms of earnings performance and/or share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.
S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of Longhou Capital Markets Pty Ltd (AFSL No. 292464). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.
Conflict of Interest Notice
S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.
The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.