What will happen?
Alcoa Corporation, a global aluminum supplier, will present its earnings report for the Q3 on October 14 after the stock market closes (23:59 GMT+3). The release will be followed by an investor conference call.
Fundamental analysis
Alcoa, the largest US aluminum producer, had a highly successful year. The aluminum demand made buyers from all over the world to line up. This metal has a wide range of applications from beverage cans to aviation and construction.
The demand for aluminum has almost doubled over the past and a half of the year. It brought the balance of supply and demand in the long-struggled aluminum industry to a complete reversal. Consumption is on the rise, while production in China, the leading aluminum supplier, stays under pressure. In this situation, buyers are forced to agree to higher prices, because the global economy is "recovering" after a year of lockdowns.
This sudden change in balance is extremely positive for Alcoa. In July, the company released a strong Q2 report and overperformed analysts' expectations. In 2021, Alcoa plans to ship from 2.9 to 3 million tons of aluminum, while earlier the company's forecast did not exceed 2.8 million tons.
Analysts at Goldman Sachs talk about the prospects for a multi-year rally in prices amid the key role of aluminum in the economy's transition to renewable energy sources. Metal demand is also supported by President Joe Biden's infrastructure project.
Alcoa is an extremely risky asset, which in the event of a large-scale sale will fall much more aggressively than the market. The stock has a beta of 2.7 (a beta above 1 indicates higher-than-market volatility in the stock; the opposite is also true).
Expectations
Analysts and experts forecast: Revenue = $2.93B, Earnings per share = $1.75
Technical analyses
Alcoa daily chart
Alcoa price has been consolidating between $51.8 and $45 for the past two months. It is still above all moving averages, which keeps bullish sentiment for this stock. The price gets held by the 50-day moving average at $45, which is the main support.
Opinion
FBS analysts believe that a bull rally will help Alcoa to show its best after the earnings report (read our US500 and US100 overview to learn more). According to the Fibonacci expansion if the price breaks through $52 it will reach $58, which is the main target for the upcoming movement.
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