What the Analysts Say: Alcan Inc.What the Analysts Say: Alcan Inc.
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UBS Investment Research analysts Brian MacArthur and Chris
Lichtenheldt continue to rate the shares of Alcan Inc. (TSX-AL,) a
buy. However, they have raised their target price to US$71.00 from
$68.00.
For the fourth quarter, ended December 31, 2006, Alcan reported
operating earnings per share of US$1.09. This included "$0.17 a share
of mark-to-market charges [on derivatives]," the analysts report.
Excluding this, operating EPS came in at $1.26 compared to the
analysts' estimate of $1.35 and the consensus forecast of $1.28.
The analysts note that the company reported record cash from operating
activities at continuing operations of $1.1 billion versus $778
million a year earlier.
To reflect their updated estimates for depreciation and selling,
administrative and general expenses, the analysts have raised their
EPS estimates for fiscal 2007 and 2008 to US$6.16 and $7.12,
respectively. Their previous estimates were $5.87 and $6.82.
The analysts report that Alcan expects aluminum consumption to grow by
6.7 per cent this year, with world supply rising by 7.8 per cent.
"Therefore the aluminum market is expected to be close to balance,
with a small surplus," the analysts say, "and inventories are expected
to remain historically low."
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