Alcoa Inc. will kick off U.S. earnings season on Monday with an earnings miss, says John Redstone, an analyst at Desjardins Securities Inc.
Mr. Redstone said the aluminum maker will report a second quarter profit of US10? per share versus the consensus estimate of US12? per share, as average aluminum prices fell in the second quarter.
“We believe the main factor that should determine if [Alcoa] meets earnings expectations for 2Q10 is the realized price for its primary and semi-fabricated products,” the analyst said in a note to clients.
Despite the weakness in the price of aluminum and its negative impact on earnings, Mr. Redstone said physical markets are improving with total inventories stabilizing year-to-date.
He maintained his Buy rating on the shares and left his US$26.40 price target unchanged.
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