UPDATE 1-RESEARCH ALERT-BMO downgrades Alcoa after Q4 loss

martedì 13 gennaio 2009 17:36

 Jan 13 (Reuters) - BMO Capital Markets on Tuesday
downgraded Alcoa Inc (AA.N: Quotazione) to "underperform" from "market
perform," a day after the largest U.S. aluminum producer posted
a fourth-quarter loss, its first in six years, that was bigger
than forecast.
 The brokerage cited a weak price outlook for aluminum and
growing inventory levels, and weak cash flows and higher
indebtedness at the company for the downgrade.
 "Investment risks with Alcoa are increasing. Barring a
sizeable gain in the aluminum price, Alcoa is forecast to
resort to increased borrowings over 2009 and potentially 2010,"
analyst Tony Robson wrote in a note to clients.
 Credit Suisse, UBS and S&P Equity Research also lowered
their price targets on the stock, following the company's weak
quarterly results.
 Shares of the company fell as much as 8 percent, but pared
some losses to trade down 57 cents at $9.49 Tuesday morning on
the New York Stock Exchange.
 "We continue to caution that we believe the aluminum market
is challenged," analysts at UBS said.
 The metal price has fallen some 50 percent since peaking at
$3,380 per tonne last July and during the fourth quarter,
aluminum MAL3 dropped from $2,415 on Oct. 1 and was around
$1,502 on Tuesday.
 Credit Suisse analysts said the company's first quarter
would be worse as declining raw material costs and
restructuring will not be enough to offset the pricing weakness
and the weak demand.
 Following are the price target cuts made on the stock of
 Company              Rating                 Price target
                                    Current          Prior
 UBS                  Neutral           $10.50          $11.50
 Credit Suisse        Outperform        $15             $20
 S&P Equity           Sell              $9              $10
 (Reporting by Antonita Madonna Devotta in Bangalore; Editing
by Deepak Kannan)