Alcoa Unveils First Low-Carbon Alumina Brand

Alcoa Corp. has unveiled the industry’s first low-carbon and smelter-grade alumina brand, EcoSource and expanded its alumina offerings. EcoSource, which will join Alcoa’s Sustana family of products, is produced “with no more than 0.6 tons of carbon dioxide equivalents (CO₂e) per ton of alumina, two times better than the industry’s average of 1.2 tons of CO₂e.”

Alcoa (AA), which produces bauxite, alumina, and aluminum products, has the largest third-party alumina business in the world. Its refineries produce the industry’s lowest carbon footprint. According to Alcoa’s CEO Roy Harvey, EcoSource along with Alcoa’s line of Sustana products “can provide advantages for customers who want to improve their environmental footprint.”

On Sept. 15, Credit Suisse analyst Curt Woodworth raised Alcoa’s price target to $18 (54.6% upside potential) from $17 and maintained a Buy rating on the stock. The analyst is optimistic about the company’s efforts to capture $900 million of targeted cash savings. Woodworth added that “The restructurings at the corporate and smelter level have structurally lowered the cost structure and Alcoa is on track to achieve the $75-100mm of working capital and $100mm of cost down targets set in 1Q.”

The analyst estimates that “EBITDA upside is likely in 2H given the recovery in aluminum/alumina price levels as well as partial value add mix improvement.” (See AA stock analysis on TipRanks)

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 2 Buys versus 6 Holds. The average price target of $13.50 implies upside potential of about 16% to current levels. Shares have declined about 46% year-to-date.

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