Kaiser Aluminum Likely to Focus on Deleveraging, UBS Says
Kaiser Aluminum (KALU) is expected to return to earnings growth and generate stronger free cash flow, but deleveraging could be the near term priority, UBS said in a note Monday.The report said EBITDA is expected to benefit from recent investments and a recovery in aerospace demand following a roughly two-year de-stocking cycle.However, the note said elevated leverage will remain a constraint, with the company likely prioritizing debt reduction."In our view KALU is unlikely to lift cash returns (div growth + repurchases) until at least 2028," the report said.The note also said its products are less reliant on scrap & imports due to impurity thresholds, meaning it gets a smaller benefit from tariffs compared with its peers.UBS initiated coverage on the stock with a Neutral rating and a $176 price target.Price: $176.63, Change: $+7.21, Percent Change: +4.26%
