NEW YORK (Reuters) - Alcoa Inc (AA.N) shares rose nearly 7 percent on Friday after Goldman Sachs resumed coverage of the aluminum producer with a “buy” rating.
In a note to investors, Goldman said that despite challenging aluminum fundamentals, the stock represented an “attractive risk-reward for medium- to long-term investors,” and the firm set a share price target of $13.
In morning trading on the New York Stock Exchange, Alcoa stock was up 59 cents, or 6.8 percent, at $9.33.
Last month, Alcoa reported a second consecutive quarterly net loss as metal prices and global aluminum demand slumped in the economic downturn.
“Alcoa’s recent capital raise has mitigated balance sheet concerns and positions shares for upside,” Goldman’s note said. “Cost control measures will help the company weather what we believe is the toughest environment the industry has ever faced.”
Improving U.S. macroeconomic data and indications of China’s economic re-inflation should gradually alleviate weak aluminum fundamentals, Goldman said.
Reporting by Steve James; Editing by Lisa Von Ahn