Shares of the leading bauxite, alumina, and aluminum producer Alcoa (NYSE:AA) slipped 2.8% in Wednesday’s after-hours of trading following the company’s announcement of weak Q4 sales. Nonetheless, its top- and bottom-line performance was better than Street’s forecast. However, concerns over aluminum prices and demand uncertainty kept analysts sidelined.
In terms of its Q4 financial performance, Alcoa’s sales of $2.6 billion were slightly better than the Street’s forecast of $2.59 billion. However, its revenue fell 2.6% year-over-year. The lower shipment of both Alumina and Aluminum impacted its Q4 top line.
What stood out is that Alcoa managed to cut losses in Q4 both year-over-year and sequentially. For instance, it delivered an adjusted loss of $0.56 per share in Q4 compared to $0.82 in the prior-year quarter. Moreover, it compared favorably with the loss of $1.14 in Q3. Also, its bottom line fared better than the Street’s estimate of a loss of $0.85 per share.
What is the Future of Alcoa Stock?
Ahead of the company’s Q4 print, UBS analyst Curt Woodworth initiated coverage of Alcoa stock with a Sell recommendation. Further, the analyst’s price target of $29 implies a limited upside potential of 6.7% from current levels. He is concerned regarding the medium-term outlook for aluminum prices and anticipates that demand weakness will persist through 2024.
Overall, Alcoa stock has a Hold consensus rating based on three Buy, five Hold, and three Sell recommendations. AA stock is down about 49% in one year, underperforming the S&P 500’s (SPX) nearly 21% gain. Despite the significant correction in its price, analysts’ average price target of $30.32 implies a limited upside potential of 11.55% from current levels.
