By Christiana Sciaudone
Investing.com — Alcoa (NYSE:) jumped more than 5% after Morgan Stanley (NYSE:) named it a top pick.
The company has an attractive valuation, the firm said, according to CNBC.
“We expect the company to benefit from a structural shift in the aluminum market led by China’s decarbonization policies (~5% of country’s carbon emissions) and the 45Mt capacity cap leading demand to outpace supply by 2023,” the firm wrote in a note.
Alcoa is trading at 2.7x EV/EBITDA on Morgan Stanley’s 2022 estimates, well below the historical average of 7.5x. “We see material upside risk to consensus estimates,” the firm wrote.
Alcoa has more than tripled over the past 12 months. The company has seen improving results as commodity prices have increased amid a surge in demand.
Earnings per share of 79 cents for the quarter ended in March surpassed the analyst expectations of 45 cents on sales of $2.87 billion, also better than the estimated $2.63 billion, according to data compiled by Investing.com.
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