J P Morgan Chase Downgrades Alcoa (AA)
Aluminum giant, Alcoa Inc. (NYSE: AA) was downgraded by J P Morgan Chase on Wednesday.
Citing concerns over fall in the metal prices, the investment bank also slashed Alcoa’s earnings outlook.
Shares fell 1.15% to $7.71, having dropped as low as 2%, a lowest level since April 2009.
The stock is almost down 6% in last four months and off about 11% since the start of this year even as broader equity markets have provided double digit returns.
The Pittsburgh based Company, which is scheduled to report fiscal second quarter results on July 8, was downgraded by JP Morgan Chase to “neutral” from “overweight”. The firms cut its price target to $12 from $9.
In a note to clients, JP Morgan Chase analyst Michael Gambardella said, “Outside of aluminum prices materially increasing or investor sentiment on the sector significantly improving, we see few catalysts for Alcoa’s stock in the near term.”
Commenting over Alcoa’s strategy to strengthen its downstream business, Gambardella said, “ (The efforts) will be largely overshadowed by a persistently weak aluminum price environment” which will put pressure on earnings and bring down the stock price, added the analyst.
Gambardella cut 2013 earnings per share (EPS) outlook by 49% to 29 cents from earlier forecast of 57 cents while 2014 EPS forecast was slashed 47% to 55 cents from $1.04.
Earlier, metal strategists at J P Morgan Chase slashed average price outlook on the metal to 89 cents a pound from 94 cents while 2014 price outlook was cut to 93 cents from $1.06 a pound.
The downgrade comes after J.P. Morgan’s metal strategists cut their 2013 aluminum price forecast to 89 cents a pound from 94 cents and lowered their 2014 outlook to 93 cents from $1.06.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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