Close

Alcoa (AA) Downgraded as Macro Factors Have 'Crushed' Aluminum Bull Case - Wolfe Research

September 22, 2022 10:25 AM EDT
Get Alerts AA Hot Sheet
Price: $33.66 -5%

Rating Summary:
    17 Buy, 13 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 10 | Down: 4 | New: 31
Join SI Premium – FREE

Get inside Wall Street with StreetInsider Premium. Claim your 1-week free trial here.

Shares of Alcoa (NYSE: AA) were downgraded to Peer Perform from Outperform at Wolfe Research Thursday, with its price target removed.

Analyst Timna Tanners told investors in a research note that macro factors have "crushed" the aluminum bull case, and despite supply-side constraints and limited new capacity, "demand has disappointed from China and amid Europe's energy crisis."

In addition, she pointed to higher U.S. interest rates and a stronger USD as reasons for the lowered outlook.

"We downgrade to Peer Perform and cut 2022E/23E aluminum forecast on challenges that led to a global surplus rather than deficits. Most importantly China produced +2.6% Jan-Aug y/y but exports rose 31% ytd y/y, amid lockdowns and a faltering property sector (14% of global demand)," wrote Tanners. "Further threats include:1) steep global energy costs hurting demand; 2) rising global interest rates; and 3) Russia dumping supply on the LME."

"Aluminum fell sharply from March's $3,849 peak, despite >1Mt/yr of capacity closed in Europe and CENX shutting Hawesville's 250Kt/yr smelter, as a testament to how much demand has fallen. This can set up for a sharp recovery when demand improves," she added.

Alcoa shares are down over 3% Thursday.

By Sam Boughedda



Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

Analyst Comments, Analyst EPS View, Analyst PT Change, Downgrades, Hot List

Related Entities

Timna Tanners