Alcoa May Beat, But Don't Expect a Pop: Analyst

JeeYeon Park | @JeeYeonParkCNBC

Published 11:08 AM ET Mon, 11 July 2011 Updated 3:41 PM ET Mon, 11 July 2011 CNBC.com

Alcoa’s quarterly results may beat Wall Street expectations, but don’t expect a positive market reaction, according to David Silver, equity research analyst at Wall Street Strategies.

“Following last quarter’s earnings beat, [Alcoa’s] stock was down in the after-market trading because of guidance,” Silver said in an interview on CNBC. “They beat on the topline and they beat on the bottomline just by a penny, but expectations were not there and I expect to see something similar for this quarter.”

Silver downgraded the aluminum producer’s rating to “hold” from “buy” on Apr. 12 and shares have declined almost 7 percent since. He has a $17 price target on the stock.

Silver sees the company earning 35 cents compared to a 32 cents a share consensus estimate from Thomson Reuters.

“It’s not going to be a huge beat but it’s all about expectations,” he added.

Silver also noted that aluminum prices are up more than 5 percent compared to where they were in the previous quarter.

“That’s going to help [Alcoa's] topline and that’s going to help offset the increase in costs for electricity, coal and energy so it’s going to allow the bottomline to beat.”

The Dow component’s earnings report unofficially marks the start of the second-quarter earnings season. JPMorgan , Google and Citigroup are among other major firms slated to report earnings this week.