Will This Analyst Upgrade Help Alcoa (AA) Stock On Thursday?

NEW YORK (TheStreet) -- Alcoa Inc. (AA) was upgraded to "overweight" from equal weight" at Morgan Stanley (MS) this morning.

The firm said it raised its rating on the lightweight metals producer based on the company's ability to exceed consensus expectations in the upstream business.

Alcoa recently released its 2014 second quarter earnings results which showed an EPS of 18 cents, up from 7 cents for the previous year, and beating analyst expectations of 12 cents per share.

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Shares of Alcoa are lower by -0.76% to $15.57 in pre-market trading today.

Separately, TheStreet Ratings team rates ALCOA INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate ALCOA INC (AA) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 209.09% and other important driving factors, this stock has surged by 87.50% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • ALCOA INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ALCOA INC swung to a loss, reporting -$2.15 versus $0.17 in the prior year. This year, the market expects an improvement in earnings ($0.48 versus -$2.15).
  • Net operating cash flow has remained constant at $518.00 million with no significant change when compared to the same quarter last year. Along with maintaining stable cash flow from operations, the firm exceeded the industry average cash flow growth rate of -34.04%.
  • AA, with its decline in revenue, slightly underperformed the industry average of 4.5%. Since the same quarter one year prior, revenues slightly dropped by 0.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Metals & Mining industry average, but is greater than that of the S&P 500. The net income increased by 216.0% when compared to the same quarter one year prior, rising from -$119.00 million to $138.00 million.
  • You can view the full analysis from the report here: AA Ratings Report
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