Goldman Sachs analyst Matthew Korn downgraded Alcoa (AA) to Neutral from Buy and lowered his 12-month price target for the shares to $25 from $30. The stock closed Friday down 24c to $21.70. With lower aluminum and alumina prices expected in the near-term and few company-specific catalysts in sight, the near-term outlook for Alcoa shares is less optimistic, Korn tells investors in a research note. The downgrade follows Goldman's more conservative forecasts for aluminum and alumina. Additional upside in Alcoa shares will be limited without a "substantial, better-than-expected" move in the commodity, contends Korn. Further, he believes that a slowing China, growing U.S. steel capacity, and fears of global recession continue to be front of mind for Metals and Mining investors. Korn tonight also downgraded Schnitzer Steel (SCHN) to Sell from Neutral and Commercial Metals (CMC) to Neutral from Buy.

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B. Riley analyst Lucas Pipes raised the firm's price target on Alcoa to $31 from $25 and keeps a Neutral rating on the shares following the Q1 report. Compared to estimates, aluminum shipments were stronger and third-party alumina shipments also came in better, the analyst tells investors in a research note. The firm increased estimates on higher London Metal Exchange pricing.

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The company states: "Adjusted EBITDA excluding special items was $132 million, a sequential increase of $43 million primarily due to lower energy and raw material costs, partially offset by lower average realized third-party price for aluminum and higher production costs."

Reports Q1 revenue $2.60B, consensus $2.56B. "In the first quarter of 2024, we finalized the terms of our acquisition of Alumina Limited, which will bring strategic, operational, and financial flexibility," said Alcoa CEO William Oplinger. "Raw material prices and markets are improving, and we are implementing near-term improvements to further strengthen Alcoa for the future."

Pre-earnings options volume in Alcoa is 1.1x normal with calls leading puts 3:2. Implied volatility suggests the market is anticipating a move near 5.4%, or $1.97, after results are released. Median move over the past eight quarters is 4.8%.

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