Alcoa (NYSE:AA) shares rose more than 2% intra-day today after Wolfe Research analysts upgraded the company from Peerperform to Outperform, setting a price target of $36.
The decision follows a recent dip in Alcoa’s stock, despite aluminum prices rising about 6% since the firm moved to Peerperform. The analysts highlighted Alcoa’s added stake in Alumina Ltd as a key benefit, as alumina—one of the strongest commodities this year—has seen a 48% increase in value.
Higher alumina costs could support aluminum prices by steepening the global cost curve, which may limit the likelihood of restarting more than 1.2 million tons of idled European smelters. The analysts see limited downside risk to aluminum prices, with Wolfe’s second-half estimates for spot LME prices in the range of $2,425 to $2,450 per ton.
The analysts also pointed to potential boosts for commodity prices from expected Federal Reserve rate cuts, copper substitution opportunities, and China capping its capacity.