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Century Aluminum (NASDAQ:CENX) +10.5% in Tuesday’s trading after B. Riley upgraded its recommendation to Buy from Neutral with a $14 price target, raised from $10, saying the company is the greatest beneficiary of 45X federal tax credits thanks to its current operational footprint and opportunities for capacity expansion and restart at Mt. Holly and Hawesville.
Century Aluminum (CENX) will receive a direct cash payment for the first five years of the 45X program (2023-27), and in the form of tradable tax credits thereafter, and related to 2023, a $55M-$60M benefit will be shown as a tax credit receivable until received in H2 2024.
“We view the company’s guidance of $55M-$60M benefits in 2023 as a floor and would note that CENX could realize ~$200M of annual benefit in the case that material costs are included, and the company achieves 100% utilization in the U.S.,” B. Riley’s Lucas Pipes wrote.
The analyst raised adjusted EBITDA estimates for Q4 2023 and FY 2024 to $10.9M from $6.1M and to $214.4M from $112.4M, respectively, while also anticipating Mt. Holly will achieve 100% capacity by Q1 2025 with Hawesville beginning a restart in Q2 2025.
