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Nov. 13, 2019, 2:03 p.m. EST

Alcoa's stock drops after BofA Merrill Lynch turns bearish on aluminum price concerns, valuation

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By Tomi Kilgore

Shares of Alcoa Corp. /zigman2/quotes/200686102/composite AA +3.67% dropped 4% in afternoon trading Wednesday, after Bank of America Merrill Lynch analyst Timna Tanners turned bearish on the aluminum products company citing a cautious view on aluminum pricing and valuation concerns. Tanners cut her rating to underperform from neutral, while keeping her stock price target at $21, which 2.1% below current levels. "Although aluminum prices rallied with base metals over the past month, partly boosted by hopes of a trade agreement, we remain cautious amid extra supply in China and more modest government-mandated winter shutdowns," Tanners wrote in a note to clients. "While some reports suggested alumina cuts in China, our colleagues noted excess supply risks." She said that stock has rallied 16% since the company reported third-quarter results on Oct. 16, after the company detailed a planned a review of its assets, while aluminum prices have gained 6%. "Investors may be overly enthusiastic over any cost savings implied in the review, in our view, as mgmt has said the process likely takes more than five years to complete and could incur added costs," Tanners wrote. the stock has tumbled 20% year to date, while the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.22% has gained 9.7%.

/zigman2/quotes/200686102/composite
US : U.S.: NYSE
$ 20.60
+0.73 +3.67%
Volume: 5.27M
Dec. 6, 2019 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$3.82 billion
Rev. per Employee
$965,500
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/zigman2/quotes/210598065/realtime
US : Dow Jones Global
28,015.06
+337.27 +1.22%
Volume: 224.83M
Dec. 6, 2019 5:07p
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