The stock, currently trading at USD 29.81, is viewed as undervalued based on Citi’s estimate of USD 1.9 billion in mid-cycle EBITDA, which equates to about 5 times earnings at mid-cycle and 6 times at spot prices.
The bank forecasts second-quarter 2025 EBITDA at USD 393 million, aligning with market consensus. However, Citi notes that free cash flow remains a key concern, particularly at current aluminium prices.
The company’s San Ciprián facility in Spain, which is undergoing restructuring and was recently affected by a nationwide power outage, is cited as a source of ongoing financial pressure.
Restructuring actions and market trends
Citi’s outlook coincides with several recent developments at Alcoa. The company finalised the sale of its 25.1 per cent stake in the Ma’aden joint venture to Saudi Arabian Mining Company for USD 1.35 billion, resulting in a USD 780 million gain expected to be recorded in the third quarter of 2025.
Alcoa has also maintained a USD 0.10 per share dividend, and its order book for Q2 remains solid, despite expected tariff-related costs of USD 90 million.
The company is also likely to benefit from a recent ruling with the Australian Taxation Office, which could lead to a USD 67 million refund in mid-2025.
Citi’s commodity team expects aluminium demand to increase over the next 6 to 18 months, citing drivers such as AI infrastructure, data centres, and clean energy projects, while supply constraints from China’s production limits and energy demand may tighten global availability.
With a leaner asset base and several one-time gains expected over the coming quarters, Alcoa appears to be in a stable position to manage short-term risks while maintaining exposure to improving market fundamentals.
