Alcoa Inc (AA) Downgraded As Earnings Approach

Alcoa Inc (AA) Downgraded As Earnings Approach
By Alcoa ( [Public domain], via Wikimedia Commons

In the traditional start to the earnings season, Alcoa Inc (NYSE:AA) will reveal its numbers for the quarter ending September 30 tomorrow afternoon. Things aren’t looking all that good for the aluminum producer, as a new Morgan Stanley (NYSE:MS) report on the company lays out.

Alcoa Inc (AA) Downgraded As Earnings Approach

The report downgraded Alcoa Inc (NYSE:AA) from Overweight to Equal Weight. The analysts expect aluminum prices to fall in the months ahead and they expect the Alcoa bottom line to suffer as a result. The report put a price target of $9 on the company, a drop of 10 percent from its previous target of $10.

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Alcoa trouble

According to the report, Alcoa Inc (NYSE:AA) said that lower alumina and aluminum prices are expected in future months, which will harm the Alcoa Inc (NYSE:AA) bottom line. The analysts lowered their estimate for 2014 earnings to 25 cents per share, down from the previous 50 cent per share estimate.

On today’s market, shares in Alcoa Inc (NYSE:AA) fell by more than 1 percent. 2013 has not been a good year for the industrial company’s shareholders. Since the start of the year, the firm’s shares have lost close to 10 percent of their value, while the wider S&P 500 managed to gain close to 18 percent.

Alcoa is one of the major companies that never quite recovered its value after the 2008 financial crisis. Shares have lost around 80 percent of their value since a peak reached in that year. Alcoa is attempting to restructure. It has closed operations around the world in order to lower costs. The market is still unsure about the firm, however. Moody’s downgraded the firm’s debt to junk earlier this year.

Alcoa earnings

Alcoa Inc (NYSE:AA) will announce earnings tomorrow afternoon after the bell rings on Wall Street. The company is expected to show a 6 cent per share profit for the three months ending September 2013 on revenue totaling $5.7 billion. In the same quarter in 2012, the company managed to earn 3 cents per share on revenue of $5.8 billion.

Alcoa Inc (NYSE:AA) earnings are the first big numbers to come out during earnings season and the company’s results have, in the past, been known to set the tone. That pattern has become less prevalent in recent years as heavy industrials like Alcoa Inc (NYSE:AA) have become less important to the stock market as a whole.

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