Shares of Alcoa jumped Friday in the first day of trading after the aluminum maker reported third-quarter results. The company just beat Wall Street expectations and said it expects some growth in global aluminum consumption.
THE SPARK: Alcoa, which is based in Pittsburgh, said late Thursday it believes that the global economy will continue to be lifted this year by a burgeoning international middle class that wants better transportation and more modern buildings. On Friday, a JPMorgan analyst upgraded the stock to "Overweight" from "Neutral" and raised his target price to $20 from $16 saying healthy demand should keep aluminum prices high.
THE BIG PICTURE: Alcoa provides aluminum to a variety of manufacturers including the auto and aerospace industries and is one of the first companies to report financial results for the quarter. Economists and investors get an early read on the health of the economy from its results.
THE ANALYSIS: JPMorgan analyst Michael F. Gambardella said that while higher aluminum prices are the main reason he expects higher earnings from the company in 2011, he also believes the company can expand its profit over the next several years in its alumina business from higher spot prices and lower-cost production.
SHARE ACTION: Shares of Alcoa Inc. rose 75 cents, or 6.2 percent, to $12.95 in morning trading Friday. The stock has traded between $9.81 and $17.60 in the past year.