Alcoa (AA) and Kaiser Aluminum (KALU) Downgraded by Wells Fargo, Price Targets Adjusted
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 13 2026
0mins
Should l Buy AA?
Source: seekingalpha
- Downgrade Action: Wells Fargo downgraded Alcoa (AA) and Kaiser Aluminum (KALU) from Overweight to Equal Weight, citing concerns that investors may be underestimating substitution risks for aluminum and that recent stock price increases are unsustainable.
- Price Target Adjustments: Alcoa's price target was raised from $58 to $71 based on a 5x estimated 2026 EBITDA, although nearly half of its estimated 2025 EBITDA comes from its alumina segment, which is currently facing depressed prices.
- Market Outlook: The analyst sees no imminent relief from weakness in the alumina market for Alcoa and expresses skepticism about tariff relief for its Canadian operations, indicating no apparent benefits from the Trump administration.
- Kaiser Aluminum Valuation: Kaiser Aluminum's price target was increased from $108 to $120, reflecting a valuation that now accounts for margin expansion into 2026, while the analyst prefers Constellium (CSTM) as the favored aluminum processor due to its better exposure to expanding scrap spreads.
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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: 59.160
Low
33.00
Averages
46.00
High
58.00
Current: 59.160
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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- Market Rebound: Following a downturn in 2022, the Dow rebounded nearly 13% in 2023, with this breakthrough occurring against the backdrop of the index climbing over 1,100 points, demonstrating a robust market recovery.
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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.
- Supply and Demand Dynamics: Low global aluminum inventories and concerns over power availability for new Indonesian smelters, coupled with rising demand from electric vehicles and grid requirements, have supported the price rally, despite Goldman forecasting a drop to $2,400 per ton in the future.
See More
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- Rating Downgrade: Morgan Stanley downgraded Alcoa (AA) from Overweight to Equal Weight with a $64 price target, citing a more balanced risk-reward after the stock's nearly 50% rise since December 1.
- 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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- 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
