CENX: Aluminum Price Strength and 50% Tariff Support Will Drive Upside Momentum

Century Aluminum's analyst price target has been increased from $30.67 to $36.00. Analysts point to stronger-than-expected aluminum prices and favorable tariff impacts as key factors behind the upward revision.

Analyst Commentary

Recent analyst research provides additional context for the upward revision in Century Aluminum’s price target, with discussion centering around company strengths, market conditions, and ongoing challenges for the sector.

Bullish Takeaways

• Bullish analysts highlight stronger than expected aluminum prices, which support positive revisions to revenue and earnings forecasts.
• The company’s exposure to robust demand from China, even as U.S. and EU markets experience weakness, is seen as supportive of growth prospects.
• Favorable tariff dynamics, particularly the 50% S232 tariffs on aluminum imports, are viewed as significant tailwinds for profitability and competitive positioning.
• Recent increases in forward price curves have led to upward adjustments in target prices, reflecting growing optimism around the company’s near-term valuation.

Bearish Takeaways

• Bearish analysts point to ongoing weakness in U.S. and EU aluminum demand, which could limit the pace of broader revenue growth.
• Reliance on tariff protection creates potential vulnerability if trade policies shift or tariffs are reduced in the future.
• Aluminum price volatility remains a risk, as market supply and demand dynamics can change rapidly.
• Execution risks persist in maintaining operational efficiency at a time when regional demand in key Western markets remains subdued.

What's in the News

• U.S. President Donald Trump reversed a Biden-era rule that imposed stricter limits on copper smelter emissions. He granted a two-year compliance exemption that may impact regulatory expectations for metals producers, including Century Aluminum (Reuters).
• Canada announced it will lift many retaliatory tariffs on U.S. products that comply with the US-Mexico-Canada Agreement. However, it is likely to keep 25% import taxes on U.S. steel and aluminum, affecting cross-border trade conditions (Bloomberg).
• The Trump administration added 407 derivative product codes to the list of goods subject to 50% tariffs on steel and aluminum. This increases tariff exposure for Century Aluminum and related companies (Reuters).

Valuation Changes

• Consensus Analyst Price Target has increased from $30.67 to $36.00 per share. This reflects greater optimism on valuation.
• Discount Rate has risen moderately from 7.92% to 8.53%. This indicates a slightly higher risk premium applied in forecasts.
• Revenue Growth projections have edged down slightly from 7.56% to 7.53%. This suggests a marginally more cautious outlook.
• Net Profit Margin estimates have decreased from 18.28% to 17.92%. This points to expectations of slightly lower profitability.
• Future P/E (Price-to-Earnings) ratio has increased from 6.55x to 7.69x. This shows that higher valuation multiples are being applied to future earnings.