Deutsche Bank has downgraded its rating on Alcoa's stock from "hold" to "sell", citing lower aluminium prices over the last two quarters as the reason for doing so.
Thing aren't boding too well for the world's third largest producer of aluminium, which has 40 per cent of its revenue accounted for by primary metals business. Company shares were down two per cent on the New York Stock Exchange yesterday.
The bank slashed the price target from $9.00 (£5.56) to $5.50 (£3.39) - a 39 per cent downside from current levels. It has also cut its price outlook for aluminium by 12-13 per cent $0.82 and $0.88/lb for 2014 and 2015, respectively, after prices have almost halved since their peak in July 2008 ($3,380 (£2,086) per tonne).
Benchmark three-month London Metal Exchange aluminum fell nearly 14 per cent in the first six months of this year, owing to to excess inventories.
In September, BNP Paribas decreased its 2014 aluminum price forecast by $135 to $1,865 (£1,149) per tonne.