Alcoa shares are currently hovering around an area of interest ahead of the company’s Q2 earnings release on Wednesday’s NY trading session. Price is finding support at the 200 SMA, which has held as a dynamic inflection point in the past.
Stochastic has been in the oversold region for quite some time, indicating that buying pressure might be building up. Similarly, RSI is giving the oversold signal as well, which suggests that a bounce might be possible.
If so, Alcoa shares could move back up to the next potential resistance at $14/share or until the previous highs at $17/share depending on the outcome of the earnings report.
Alcoa Shares Outlook
In a recent report, Morgan Stanley analyst Paretosh Misra lowered his price target on shares of Alcoa to $16, after a downward revision in the 2015-2017 EBITDA estimates. “Downward revisions to consensus estimates and depressed metal pricing makes near term rebound in shares challenging but we see drivers in place for a 2H recovery in shares,” Misra explained.
In the second quarter of 2014, earnings came in at $0.18 per share, and revenue at $5.836 billion. For the current quarter, the Street is modeling consensus earnings of $0.23 per share on revenue of $5.82 billion, while the crowd is projecting consensus earnings of $0.26 per share on sales of $5.897 billion. According to Estimize, the company is expected to deliver a year-over-year earnings growth rate between 27 percent and 45 percent.
The company has a history of beating market expectations for its earnings reports, which brings up this possibility for their upcoming release. However, the company has recently filed SEC form 8K for costs associated with exit or disposal activities for its smelter in Brazil, which might have an impact on the company’s numbers in Q2. According to the filing, the facility has been idle since May 2014 due to challenging global market conditions for primary aluminum and higher operating costs, which made the smelter uncompetitive.
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