"We like the growth story driven by mid and downstream operations, as well as management's history of taking costs out of the model," analysts said.
"The outlook for the commodity upstream operations is more controversial, but we think the price recovery looks rational. We value shares at $22 to $24 based on an EV/EBITDA multiple of 8 to 8.5x our 2015 estimate. Our 2014E/2015E EPS are 83 cents/$1.24," analysts added.
Alcoa is a fully integrated supplier of aluminum products with up, mid and downstream operations. In the upstream, Alcoa produces the raw material alumina, as well primary aluminum. The mid and downstream operations convert primary aluminum (as well as other metals such as titanium and alloys) into shaped and finished products.
Shares of Alcoa are up 0.41% to $17.28 in pre-market trading.
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 revenue growth, solid stock price performance, increase in net income, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."