BMO Capital Markets has revised its price target for Alcoa Inc. (NYSE: AA) downward to $65.00 from the previous $67.00, while keeping a Market Perform recommendation on the stock. This updated valuation closely mirrors InvestingPro's Fair Value estimate, with Alcoa currently trading at $63.14, just 5.7% shy of its 52-week peak of $66.95.
The price adjustment follows Alcoa’s fourth-quarter earnings report for 2025, which exceeded expectations. However, BMO analyst Katja Jancic explained that the earnings beat primarily stemmed from a one-off CO2 credit rather than ongoing operational improvements. Despite this qualification, Alcoa delivered impressive financial performance including diluted earnings per share of $4.31 and a 16.94% growth in revenue over the trailing twelve months.
Alcoa’s targets for aluminum production and shipments in 2026 are generally consistent with BMO’s projections, but the company’s alumina output goals show mixed results relative to analyst forecasts. The firm generated revenues of $12.87 billion in the last year with a gross profit margin of 18.89%, underscoring its solid manufacturing and pricing performance.
During the latest quarter, Alcoa reached the higher spectrum of its net debt target. Moving forward, the company's immediate focus remains on stabilizing this debt level and pursuing further reductions. According to InvestingPro, Alcoa operates with a moderate debt profile, having a debt-to-equity ratio of 0.41 and total debt-to-capital ratio of 0.13, indicating a manageable leverage position within the industry context.
BMO cited the extension of Alcoa’s asset sale schedule as a notable factor behind the price target reduction, describing it as "a bit anticlimactic but explainable." The revised valuation represents enterprise value to EBITDA multiples of 7.5x for 2026 estimates and 7.7x for 2027, whereas Alcoa is currently trading at an EV/EBITDA of 6.88 and a price-to-earnings ratio of 14.82.
In a recent earnings announcement, Alcoa reported adjusted earnings per share of $1.26 for the fourth quarter of 2025, outperforming the analyst consensus of $0.93. Quarterly revenue reached $3.4 billion, topping expectations of $3.28 billion. These results were attributed to effective operational execution and strategic market positioning, contributing positively to the corporation’s robust financial health amid a challenging environment for commodity producers.
The strong quarterly performance has attracted investor attention, pointing to Alcoa’s resilience and capacity to exceed market forecasts. Nonetheless, the market is keeping a close watch on the company’s future trajectory, particularly as it navigates the prolonged asset disposal timeline and works to maintain a disciplined financial strategy.
For those interested in a thorough evaluation, InvestingPro offers comprehensive research coverage that includes over 1,400 U.S. equities, featuring advanced valuation tools and peer comparisons specifically for Alcoa.