Tuesday, BMO Capital adjusted its price target on shares of Century Aluminum (NASDAQ:CENX) to $18.00, up from the previous $16.00, while keeping a Market Perform rating on the stock.
The adjustment follows Century Aluminum's third-quarter earnings report, where the company posted an EBITDA of $69 million, which excludes an incremental $35 million from a 45X credit not included in the guidance or estimates. This figure is close to BMO Capital's and the consensus estimates of $70 million and $68 million, respectively.
Looking forward to the fourth quarter of 2024, Century Aluminum has provided an EBITDA guidance range of $70 million to $80 million, which surpasses BMO Capital's forecasts but aligns with the general market consensus. A significant development for the company is the ongoing strategic alternatives review for the idled Hawesville smelter, which could impact future operations and financial outcomes.
BMO Capital has raised its estimates for Century Aluminum, taking into account updated market prices and the additional 45X credit. The firm suggests that if spot aluminum prices continue at their current levels, there could be further upside to its forward estimates for the company.
The analyst at BMO Capital emphasized the potential for Century Aluminum's performance to exceed expectations if the current market conditions for aluminum persist. This sentiment underscores the firm's decision to increase the price target for the company's shares while maintaining a neutral Market Perform rating.
In other recent news, Century Aluminum Company reported a strong third quarter in 2024, with adjusted EBITDA reaching $104 million, due to improved aluminum prices and the benefit of new Section 45X tax credits.
The third quarter also saw shipments of approximately 169,000 tons and net sales of $539 million, with adjusted net income standing at $60 million. Despite anticipating a weaker price environment for the fourth quarter, the company forecasts an adjusted EBITDA between $70 million and $80 million.
Recent developments also highlight the company's strategic evaluations of its assets, particularly the competitive cost structure of the Jamalco alumina asset. The company is also exploring the potential redevelopment of its Hawesville facility. CEO Jesse Gary addressed potential asset sales, stating that no transaction structure has been finalized, but remained optimistic about the cost structure and competitive positioning of the Jamalco asset.
Despite facing challenges such as a tragic safety incident, Century Aluminum continues to navigate the dynamic global aluminum market with resilience. The company's commitment to safety and operational stability across all smelters was emphasized, particularly in the recovery at Jamalco post-Hurricane Beryl. These developments underscore Century Aluminum's proactive measures and strategic foresight.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Century Aluminum's financial performance and market position. The company's market capitalization stands at $1.63 billion, with a P/E ratio of 7.88, indicating a potentially attractive valuation relative to earnings. This aligns with BMO Capital's increased price target and the positive outlook on the company's EBITDA guidance.
InvestingPro Tips highlight Century Aluminum's strong performance, noting a high return over the last year and a strong return over the last three months. This is corroborated by the impressive 1-year price total return of 155.31% and a 3-month return of 45.08%. These figures support the analyst's optimistic view on the company's potential to exceed expectations if current market conditions persist.
Despite these positive indicators, it's worth noting that Century Aluminum suffers from weak gross profit margins, as pointed out by another InvestingPro Tip. The company's gross profit margin for the last twelve months stands at 7.52%, which may be an area for improvement as the company navigates the current market dynamics.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Century Aluminum, providing a deeper understanding of the company's financial health and market position.
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