Alcoa (AA) is likely to continue benefiting from elevated aluminum prices, but this is already reflected in its stock, which has reached a balanced risk-reward level after "significantly" outperforming peers, Morgan Stanley analysts said in an emailed note Tuesday.

While the firm continues to see Alcoa benefitting from high London Metal Exchange aluminum pricing and a US Midwest Premium that recently exceeded the $1 per pound level, it is already reflected in the share price, according to the note.

Moreover, the timeline for a possible transformation of a curtailed site into a data center is uncertain, creating a catalyst vacuum and offering limited upside to the firm's price target, the anlaysts said.

The brokerage updated its estimates and now forecasts earnings before interest, taxes, depreciation, and amortization of $618 million in Q1 2026, $2.83 billion in 2026, $2.48 billion in 2027, $2.07 billion in 2028, and $2.98 billion in 2029.

Morgan Stanley's normalized diluted EPS estimates are $1.32 in 1Q26, $5.63 in 2026, $4.49 in 2027, $3.31 in 2028, and $5.77 in 2029, the report said.

Morgan Stanley downgraded Alcoa to equal-weight from overweight, but lifted its price target on the stock to $64 from $52.

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