B of A Securities Raises Alcoa Price Target to $27.00, Maintains 'Underperform' Rating

B of A Securities has raised its price target for Alcoa (AA) from $26 to $27, a 3.85% increase, while maintaining an "Underperform" rating. The average one-year price target from 9 analysts is $35.09, with a high estimate of $42.30 and a low of $26.00, implying an upside of 22.86% from the current price of $28.56.

B of A Securities has revised its price target for Alcoa (AA) from $26 to $27, representing a 3.85% increase. This adjustment comes despite the company's recent earnings report, which indicated a decline in revenue and profitability for the second quarter of 2025. The new price target is part of a broader analyst consensus, with an average one-year target of $35.09, a high estimate of $42.30, and a low estimate of $26.00.

Alcoa reported a 10% sequential decline in revenue to $3 billion for Q2 2025, driven by lower alumina prices and increased Section 232 tariff expenses on North American imports from Canada. The company's net income attributable to Alcoa decreased to $164 million from $548 million in the prior quarter, with earnings per common share falling to $0.62. Adjusted net income was $103 million, or $0.39 per share, on a non-GAAP basis. Adjusted EBITDA was $313 million, down $542 million sequentially from Q1, largely due to weaker alumina and aluminum prices and increased tariffs.

The analysts at B of A Securities have taken into account Alcoa's operational challenges, including the impact of the Section 232 tariffs and the ongoing issues at the San Ciprián smelter. The company has redirected portions of its Canadian production to non-U.S. customers to mitigate tariff impacts, and it has also been advocating for trade policies that support the aluminum industry.

Despite these challenges, Alcoa has shown resilience and a commitment to improving its financial performance. The company's adjusted net debt improved from $2.1 billion to $1.7 billion at the end of the quarter, indicating a focus on deleveraging. Additionally, the favorable ruling in the Australia tax dispute and the sale of the Ma’aden joint venture for $1.35 billion have provided significant liquidity.

The revised price target reflects the analysts' belief that Alcoa can navigate the current market conditions and achieve a turnaround in its financial performance. However, the company will need to address the ongoing operational challenges and tariff impacts to fully realize this potential.

References:
[1] https://www.fool.com/earnings/call-transcripts/2025/07/17/alcoa-aa-q2-2025-earnings-call-transcript/