Why Century Aluminum Stock Blasted Almost 13% Higher on Wednesday
Key Points
Wells Fargo began its coverage of the metallurgy company.
It's quite bullish on the prospects for the business.
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Like the metal in which it specializes, Century Aluminum (NASDAQ: CENX) was solid on Wednesday. Investors piled into the stock following the initiation of coverage by one of America's top banks. This bull run pushed the company's shares up by nearly 13%, which was particularly impressive given that the S&P 500 index rose by a comparatively modest 0.6%.
Buy now, recommends large bank
That famous bank was Wells Fargo, which launched its tracking of Century Aluminum stock with an overweight (buy, in other words) recommendation. Wells Fargo placed a target price of $37 per share on the aluminum company.
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Wells Fargo's opening take on Century Aluminum was part of a broader analysis of mining and metallurgy stocks. According to reports, the bank feels that aluminum prices have been higher than expected, due in no small part to demand from consistently raw-materials-hungry China.
Wells Fargo believes this strong demand from the massive Asian country will more than compensate for relatively light take-up in the U.S. and the European Union.
Tough tariffs
On top of that, Century Aluminum -- as company that mainly produces its chosen metal in this country -- is benefiting from the current situation with tariffs. In June, President Donald Trump effectively doubled the levy on aluminum imports from most foreign countries, to 50% from the previous 25%. Even if the current level doesn't last, the company should do well as a major producer of the metal.
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Wells Fargo is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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