Kaiser Aluminum Likely to Focus on Deleveraging, UBS Says

MT Newswires Live05-06

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

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