🎈 Up Big Today: Find today's biggest gainers with our free screenerTry Stock Screener

Analyst remains bullish on Century Aluminum shares with aluminum price forecast driving upside

EditorAhmed Abdulazez Abdulkadir
Published 03/12/2024, 11:16 pm
CENX
-

On Tuesday, Wolfe Research upgraded shares of Century Aluminum (NASDAQ:CENX) from Peerperform to Outperform, setting a new price target of $27.00. The upgrade comes as the stock has delivered an impressive 170% return over the past year, according to InvestingPro data. The upgrade reflects a positive outlook based on higher commodity price forecasts for aluminum and the potential sale of a significant power connection at the company's currently inactive Hawesville smelter.

The analyst noted that the upgrade occurred despite Century Aluminum's strong year-to-date performance of nearly 87%. The firm anticipates an increase in the company's fourth-quarter EBITDA (earnings before interest, taxes, depreciation, and amortization) to $82 million, up from the previously estimated $73 million. This follows the company's last twelve months EBITDA of $185.5 million. Expectations for the company's 2025 EBITDA have also risen, now forecast at $342 million, a significant increase from the earlier $265 million projection.

The optimism surrounding Century Aluminum is partly due to the company's ability to benefit from higher alumina prices, which more than doubled in 2024. This is attributed to Century Aluminum's mid-2023 investment in Jamalco, which provides a hedge against rising alumina input costs. The analyst suggests that higher alumina costs are likely to bolster aluminum prices, especially as smelters in China and Russia have closed in response to high expenses.

The analyst acknowledged the viewpoint of those skeptical about the sustainability of the recent alumina spot price, which reached $787 per ton. However, the analyst argued that prolonged periods of low alumina prices have led to a lack of investment in refinery capacity.

Additionally, challenging bauxite mining conditions in Australia and Guinea are expected to maintain elevated input costs over an extended period. InvestingPro analysis shows the company currently trades at a P/E ratio of 6.85x, with analysts expecting continued profitability this year. Get access to 10+ additional exclusive ProTips and comprehensive financial analysis for Century Aluminum through InvestingPro's detailed research reports.

In other recent news, Century Aluminum has reported strong third-quarter earnings, with an adjusted EBITDA of $104 million, attributed to improved aluminum prices and the benefit of new Section 45X tax credits. The company also recorded shipments of approximately 169,000 tons and net sales of $539 million.

Looking forward, Century Aluminum provided an EBITDA guidance range of $70 million to $80 million for the fourth quarter of 2024. BMO Capital has adjusted its price target on Century Aluminum's shares to $18.00, up from the previous $16.00, while maintaining a Market Perform rating. The firm has raised its estimates for Century Aluminum, considering updated market prices and the additional 45X credit.

Furthermore, Century Aluminum is undergoing a strategic alternatives review for the idled Hawesville smelter, which could impact future operations and financial outcomes. Lastly, the company is also exploring the potential redevelopment of its Hawesville facility and the competitive cost structure of the Jamalco alumina asset."

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.