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AA: Low Carbon Smelting Shift Will Likely Pressure Future Returns

Analysts Raise Alcoa Price Target as New Partnerships and Plant Closure Drive Valuation Upward

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AnalystConsensusTarget
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Published 24 Apr 2025

Update shared on 20 Dec 2025

Fair value Increased 9.99%
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Narrative Update on Alcoa

Analysts have raised their price target on Alcoa by approximately 10 percent to around 45 dollars per share, citing expectations for modestly stronger revenue growth, materially improved profit margins, and a more attractive forward earnings multiple.

What's in the News

  • Alcoa, Ball and Unilever unveiled the first consumer packaging using ELYSIS carbon free smelting technology, combining low carbon primary aluminum with recycled content to create one of the lowest footprint aerosol cans on the market (company announcement).
  • At its 2025 Investor Day, Alcoa indicated it is actively evaluating mergers and acquisitions, emphasizing deals that offer clear industrial synergies, cultural alignment and long term value creation for shareholders (Investor Day remarks).
  • The company reported third quarter 2025 operating results showing slightly lower bauxite output but modest year over year gains in alumina and aluminum production volumes (operating results release).
  • Alcoa reached a new 10 year renewable power agreement for its Massena, New York smelter and committed about 60 million dollars to modernize the site’s anode baking furnace, reinforcing the long term viability of one of the last U.S. smelters (Massena operations update).
  • Alcoa advanced plans, alongside U.S., Australian and Japanese partners, for a gallium plant at its Wagerup alumina refinery in Western Australia, targeting a 2026 final investment decision to help diversify global supply of this critical semiconductor metal (gallium project announcement).

Valuation Changes

  • The Fair Value Estimate has risen modestly, increasing from approximately 41.29 dollars to 45.42 dollars per share.
  • The Discount Rate has edged lower, moving from about 8.67 percent to 8.60 percent, reflecting a slightly reduced risk profile.
  • Revenue Growth has improved slightly, with the long term assumption increasing from roughly 3.28 percent to 3.52 percent annually.
  • The Net Profit Margin has risen significantly, nearly doubling from around 4.46 percent to 8.15 percent in the updated model.
  • The Future P/E has fallen materially, declining from about 21.7 times to 13.0 times forward earnings, implying a less demanding valuation multiple.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.