2023-07-14 07:45:43 ET
Alcoa ( NYSE: AA ) -2.4% pre-market Friday as J.P. Morgan downgrades the stock to Neutral from Overweight with a $36 price target, cut from $54, citing weaker near-term aluminum fundamentals including planned capacity restarts in China while primary demand remains subdued.
JPM's Bill Peterson also is cautious over the timing of permitting extensions for Alcoa's ( AA ) mining operations in Western Australia, with no clear line of sight on a resolution as the company faces a more stringent permitting process and continued pushback from local activists.
An agreement ultimately should be met, as evidenced by Alcoa's ( AA ) commitment to supply Emirates Global Aluminum with up to 15.6M tons of alumina over an eight-year agreement, but Peterson sees any delayed resolution as an overhang on the shares.
Peterson said his preferred stock in the aluminum sector is Overweight-rated Constellium ( CSTM ), which trades at a discount to peers and likely will emerge as a capital returns story in 2024.
More on Alcoa:
- Financial and valuation comparison to sector peers
- Analysis: Alcoa: Exploring The Mystery Of High Tax Rates
- Stock price return:Down 17.5% YTD, down 15% in the past 12 months
For further details see:
Alcoa cut at J.P. Morgan on weaker aluminum fundamentals