In a recent report, analysts as Citi Research adjusted their bullish stance on Alcoa Inc AA 0.7%. Analysts see several outside factors affecting Alcoa’s performance in 2015, including the weak commodity price environment and the strong dollar.

Falling Aluminum Prices

Lower commodity prices will certainly weigh on Alcoa’s earnings, but analysts point out that aluminum prices have held up relatively well lately compared to other industrial metals such as copper and nickel. Citi forecasts a negative $0.10 per share impact on Alcoa’s earnings in 2015 due to the weak aluminum prices.

Positive Impact Of Strong Dollar

While many American companies are seeing a drag on earnings from the strong dollar, Alcoa’s international positioning of many of its upstream assets will allow the company to benefit from the forex environment in 2015. In fact, Citi estimates that Alcoa will gain about $0.04 per share from forex tailwinds this year.

First To The U.S. Auto Party

Alcoa was ahead of the game when it comes to U.S. demand for aluminum auto sheets, and its factory in Davenport is already producing product that is completely contracted for the Ford Motor Company’s F 1.12% F150. Alcoa’s Tennessee facility, expected to come online later this year, will be producing for other F-Series trucks, including the F250.

Analysts believe that Alcoa’s recently-patented micromill process could pose a real threat to auto competitors such as Constellium NV CSTM 0.2%.

Outlook

Overall, Citi analysts believe that Alcoa “can at least replicate 2014 EPS given the growth of their downstream.” Citi has a Buy rating on Alcoa and a $20 target for the stock.

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