UBS upgraded Alcoa (NYSE: AA) to Buy from Neutral and raised its price target to $80 from $75. The stock has surged 139% over the past year and currently trades at $66.27, reflecting strong momentum in the aluminum sector.
Analyst Daniel Major said the upgrade reflects expectations that smelter outages from the prolonged conflict in the Middle East will offset near-term demand risks, leading to stronger aluminum prices and premiums. According to Bond.az data, 7 analysts have revised their earnings upwards for the upcoming period, with the consensus price target reaching as high as $92.
UBS said Alcoa is currently discounting an LME aluminum price of approximately $3,000 per ton, roughly 20% below spot prices. The firm forecasts sequentially higher EBITDA and free cash flow in the second quarter.
UBS sees upside to 2027 consensus estimates, with its EBITDA forecast 10% above consensus. The firm projects sustained free cash flow and potential divestments, including the Massena East facility, will reduce net debt well below Alcoa’s target range of $1.0 billion to $1.5 billion.
UBS said the debt reduction could enable share buybacks in the second half of 2026. In other recent news, Alcoa reported first quarter 2026 earnings per share of $1.40 (vs. $1.47 expected) and revenue of $3.19 billion (vs. $3.3 billion). The company also declared a quarterly dividend of $0.10 per share.
