Do 3 Fresh Analyst Upgrades for Century Aluminum Signal the All-Clear?

March 14, 2018 by Jon C. Ogg

Century Aluminum Co. (NASDAQ: CENX) is one of the great American metals companies that should be set to win if steel and aluminum tariffs do not turn into an all-out trade war. There are of course risks, particularly if steel and aluminum were just the start. Wall Street thinks Century Aluminum is now in the sweet spot.

To prove the point, Century Aluminum has scored three big analyst upgrades in three straight days. That trend had been seen in many companies and sectors at the start of 2018, but the analyst pile-on trades generally applied to higher growth and technology sectors ahead of earnings season. The long and short of the matter is that Wall Street analysts believe Century Aluminum is set to do well in 2018 and beyond.

What matters about Century Aluminum is that it almost has to have some domestic protection. It is not just the largest producer of primary aluminum in the United States. The company is the primary producer of high-purity aluminum used in military aircraft manufacturing.

On Wednesday, JPMorgan raised Century Aluminum to Overweight from Neutral and the price target to $29 from the $18. This call was after a 3.7% gain to a $21.58 close the prior day. What was interesting about this call was that JPMorgan had just lowered its price target to $18 from $21 on February 23, citing earnings pressure expected to remain as it was preparing to restart its Hawesville smelter.

Cowen raised Century Aluminum to Outperform from Market Perform and its price target to $30 from $23 on Tuesday. This was after shares had risen 3.3% on Monday to $20.82. The Cowen upgrade cited the Section 232 boost allowing Century Aluminum to restart significant domestic production and to boost its capacity.

Lastly, BMO Capital Markets raised Century Aluminum shares to Outperform from Market Perform, and it raised its price target to $28 from $20. This upgrade was based on a post-tariff volume spike and in expectations for Midwest premiums. Back in February, BMO had warned that cost pressures would squeeze some of the price and premium gains.

Century Aluminum now has a Thomson Reuters consensus analyst price target of $25.00, which is up from $19.80 on March 9 and from $18.20 a month ago. The consensus target price was less than $16 at the start of January.

Century Aluminum shares did not take the “three’s a charm” reaction on Wednesday. Its shares were down 3.6% at $2o.80 in late morning trading. The stock has a 52-week range of $11.26 to $24.77.

Back on March 8, the company itself applauded the Section 232 tariffs. President and CEO Michael Bless said:

We strongly support today’s signing of the Presidential Proclamation by President Donald J. Trump that will impose broad comprehensive relief to stop the flood of aluminum imports into the United States. President Trump’s decisive action protects thousands of American aluminum workers from countries that cheat and puts U.S. national security first. We commend President Trump for acting swiftly and boldly on the aluminum sec. 232 to save the American aluminum industry.

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