Dahlman Rose Downgrades Alcoa (AA) to Hold Sees Continued Weakness in Prices; Spin-Off Could Boost Fortunes

September 27, 2012 6:57 AM EDT
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Dahlman Rose downgraded Alcoa (NYSE: AA) from Buy to Hold.

The firm expects aluminum prices to remain range-bound and do not believe the shares will be appropriately valued under the current corporate structure. They see prices fluctuating between $0.85 and $1.05/lb over the next 12 months. Despite an economy showing signs of weakness, China continues to produce at record levels.

A difficult decision to spin off its downstream businesses could ultimately be the key, the firm said. "Alcoa's Global Rolled Products and Engineered Products and Solutions segments have performed quite well during this time, and this is where Alcoa's future lies, in our opinion," the analyst said. "We believe the value of Alcoa's parts is far greater than its current share price, but do not believe that value will be realized in the company's current form."

For an analyst ratings summary and ratings history on Alcoa click here. For more ratings news on Alcoa click here.

Shares of Alcoa closed at $8.89 yesterday.

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