JPMorgan Downgrades Alcoa (AA) to Underweight

JPMorgan analyst Bill Peterson downgraded Alcoa (NYSE: AA) from Neutral to Underweight with a price target of $50.00 (from $45.00).

The analyst comments: "We downgrade AA to Underweight following a period of outperformance, with shares trading at 7.1x on FY26/27 spot vs. 4.7x 1yr/5yr avg. While we commend management's continued execution on driving efficiencies and cost downs, we view the risk-reward skewed negatively at current valuation. JPM’s Base Metals Research team is forecasting modest FY26/27 surpluses of (307Kt/215Kt), partly driven by ~1.5Mtpa of new Indonesian supply over 2026-27. We also note initial Jan’26 China inventory levels have risen ~15% vs. the Dec’25 avg. (Figure 9Absolute China Visible Aluminum Inventory (SHFE + Bonded)). Thus, it appears Chinese buyers are resisting higher prices, resulting in weaker import demand, while inventories conversely look relatively healthy heading into the typical pre-CNY holiday re-stocking period. We acknowledge that our call may be ‘early’ given what appears to be a risk-on environment to start the year, including across the commodity space, but with our assumption of looming supply, we anticipate aluminum pricing could decouple from copper, leveling out and driving downside in AA shares. With regards to potential catalysts, we lack conviction on a near-term S232 tariff reprieve, potential asset sales have been telegraphed with near-term cash inflows likely well below the $500M-1B FY30 target, and improved bauxite grades remain a 2028 story at the earliest, in our view."

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 $62.74 yesterday.

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