Mt Holly Restart And US Smelter Will Drive Aluminum Expansion

Analysts have raised their price target for Century Aluminum to $31.67 from $29, citing stronger aluminum prices and improved profit margin forecasts as key drivers for the update.

Analyst Commentary

Recent research updates on Century Aluminum reflect evolving perspectives on the company’s future, with notable shifts in analyst sentiment following improved market conditions for aluminum and company-specific advantages.

• Bullish analysts have highlighted the significant outperformance of aluminum prices. These prices are expected to support higher revenue and profitability for Century Aluminum.
• Expectations for robust demand from China bolster confidence in the company’s growth outlook. This confidence persists even as domestic and European business trends remain subdued.
• Favorable trade policy conditions, including substantial tariffs on aluminum imports, benefit Century Aluminum and strengthen its competitive positioning.
• Revised financial projections and updates to market expectations have led to upward revisions in price targets, indicating improved sentiment around execution and valuation.

• Bearish analysts remain cautious about ongoing weakness in the U.S. and EU markets. This could temper the company’s overall growth trajectory.
• There are concerns that recent price appreciation in aluminum may not be sustainable if demand trends shift or if global supply increases.
• Market volatility and reliance on favorable tariff structures could expose Century Aluminum to downside risk if trade policies change or if the macro environment deteriorates.

What's in the News

• Canada will lift many retaliatory tariffs on U.S. products but is expected to retain a 25% import tax on U.S. steel and aluminum. This move directly affects U.S.-based producers like Century Aluminum (Bloomberg).
• The Trump administration has expanded tariffs to include 407 additional derivative products made from steel and aluminum. This expansion impacts companies such as Century Aluminum (Reuters).
• Century Aluminum has signed an extended power agreement with Santee Cooper for its Mt. Holly smelter through 2031. The agreement enables a $50 million investment to restart idle capacity, create over 100 new jobs, and boost U.S. aluminum production by 10% (Company Announcement).
• The company has completed the repurchase of over 7.1 million shares for $86.27 million as part of its ongoing buyback program. This represents 7.9% of shares announced since 2011 (Company Update).

Valuation Changes

• Consensus Analyst Price Target has increased from $29.00 to $31.67, reflecting a modest rise in anticipated value.
• Discount Rate has decreased slightly from 7.84% to 7.83%, suggesting marginally improved risk perceptions.
• Revenue Growth forecasts have fallen from 9.73% to 7.57%, indicating lower expected top-line expansion.
• Net Profit Margin projections have increased meaningfully from 16.00% to 18.27%, pointing to stronger profitability expectations.
• Future P/E Ratio has risen slightly from 6.65x to 6.75x, which suggests a minor change in the valuation multiple assigned by analysts.