Deutsche Bank Downgrades Alcoa (AA) to Hold; Still High Leverage Poses Risk

Deutsche Bank downgraded Alcoa (NYSE: AA) from Buy to Hold with a price target of $14.00.

Deutsche analyst says, "We have updated our Alcoa model based on DBs revised aluminum estimates, which have been lowered by 11% to $1.18/lb in 2012 and by 5% to $1.20/lb in 2013. As a result of aluminum price revisions and accounting for the sticky nature of key raw materials for Alcoa, we are cutting our 2012 and 2013 EPS to $1.27 (-29% versus prior) and $1.54 (-20%), respectively. Our EPS estimates for 2012 is 7% lower than Bloomberg consensus of $1.37, but 4% higher than $1.49 in 2013."

"We strongly prefer companies with strong balance sheets (B/S), lower project execution risk and potential to return cash to shareholders. We increasingly favor gold producers and are still staying long bulk commodities, noting pricing has held-up, despite equity sell-off."

For more ratings news on Alcoa click here and for the rating history of Alcoa click here.

Shares of Alcoa closed at $9.57 yesterday.

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