Alcoa Stock Rises Despite Downgrade by Morgan Stanley
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 27 2026
0mins
Should l Buy AA?
Source: seekingalpha
Alcoa Corp (AA) saw a price increase of 5.02% as it crossed above the 5-day SMA, even amid broader market declines with the Nasdaq-100 down 1.25% and the S&P 500 down 0.53%.
The stock's rise comes despite a downgrade from Morgan Stanley, which shifted its rating from Overweight to Equal Weight, citing a more balanced risk-reward after a nearly 50% increase since December 1. However, Alcoa is implementing productivity initiatives expected to yield $50M-$60M annually in IRA production tax credits, which could bolster profitability in a tighter aluminum market.
This positive outlook on productivity and profitability contrasts with the market's overall weakness, suggesting that Alcoa's strategic initiatives are resonating well with investors, even as external conditions remain challenging.
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Analyst Views on AA
Wall Street analysts forecast AA stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for AA is 46.00 USD with a low forecast of 33.00 USD and a high forecast of 58.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
10 Analyst Rating
6 Buy
2 Hold
2 Sell
Moderate Buy
Current: 56.380
Low
33.00
Averages
46.00
High
58.00
Current: 56.380
Low
33.00
Averages
46.00
High
58.00
About AA
Alcoa Corporation is a vertically integrated aluminum company comprised of bauxite mining, alumina refining, aluminum production (smelting and casting), and energy generation. The Company’s operations are comprised of two business segments: Alumina and Aluminum. The Alumina segment primarily consists of its bauxite mines and alumina refineries, which generally include the mining of bauxite and other aluminous ores, as well as the refining, production, and sale of smelter grade and non-metallurgical alumina. The alumina produced by this segment is sold to internal and external aluminum smelter customers; a portion of the alumina is sold to external customers who process it into industrial chemical products. The Aluminum segment consists of the Company’s aluminum smelting and casting operations along with the Company’s energy production assets in Brazil, Canada, and the United States. It has direct and indirect ownership of 26 operating locations across nine countries on six continents.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Dollar Weakness Impact: Trump's comments expressing indifference towards the dollar's decline intensified bearish sentiment in the market, leading to price increases in aluminum and other base metals, with copper up 1.5% and zinc up 1.9%.
- Goldman Sachs Upgrades Outlook: Goldman Sachs raised its aluminum price forecast for H1 2023 from $2,575 to $3,150 per ton, although still below current prices, indicating strong confidence in the aluminum market and sustained investor optimism.
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- Productivity Initiatives: Alcoa is implementing several measures to enhance productivity, reduce costs, and optimize its asset portfolio, while also expecting $50M-$60M annually in IRA production tax credits for U.S. aluminum, bolstering profitability.
- Market Conditions: A tighter aluminum market is expected to sustain profitability, with U.S. regional premiums reflecting a 50% tariff; Alcoa has identified 10 high-priority curtailed sites for potential conversion to hyperscale data centers.
- Transaction Delays: The timeline for transforming curtailed sites into data centers continues to be pushed back, and escalating trade tensions between the U.S. and Canada suggest that obtaining a Section 232 exemption for Canadian aluminum may become more challenging.
See More
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See More
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- Slight Revenue Decline: Q4 revenues slipped 1% year-over-year to $3.45 billion, yet remained slightly above analyst consensus, driven by a 3% increase in alumina segment revenues and a 21% rise in aluminum business, reflecting resilient market demand.
- Future Production Outlook: Alcoa anticipates total alumina production of 9.7 to 9.9 million metric tons in FY 2026, an increase from 2025, indicating positive progress in productivity improvements that may further strengthen market competitiveness.
- Complex Analyst Views: While Q4 adjusted EBITDA of $546 million topped expectations, UBS noted that this included $57 million in one-off CO2 credits, and stripping these away revealed that actual performance missed the mark, suggesting potential challenges ahead.
See More
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- High Strike Call Options: Notably, the $65 strike call option expiring on February 20, 2026, has seen significant activity with 3,671 contracts traded today, representing around 367,100 underlying shares of AA, suggesting bullish sentiment among investors regarding its stock price.
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See More
