Jefferies Keeps “Buy” Rating on Alcoa, but Lowers Price Target and Estimates (AA)

Aluminum producer Alcoa Inc. (AA) on Tuesday caught some mixed commentary from analysts at Jefferies & Co.

The firm maintained its “Buy” rating on AA but reduced its price target from $12 to $11. That new target suggests a 26% upside to the stock’s Monday closing price of $8.76. The firm also cut its 2012 earnings estimate from 70 cents all the way down to 40 cents per share, while 2013 outlook was lowered from 90 cents to 80 cents.

A Jefferies analyst commented, “Unfortunately, we continue to believe the benefits of Alcoa’s extensive cost cutting efforts are flowing largely to customers and not shareholders. With the strong dollar and sluggish aluminum prices, we are compelled to reduce estimates once again.”

Alcoa shares rose 7 cents, or +0.8%, in premarket trading Tuesday. The company reported second quarter earnings late Monday that exceeded expectations on an adjusted basis.

The Bottom Line
Shares of Alcoa (AA) have a 1.37% dividend yield, based on last night’s closing stock price of $8.76. The stock has technical support in the $8 price area. If the shares can firm up, we see overhead resistance around the $10-$11 price levels.

Alcoa Inc. (AA) is not recommended at this time, holding a DARS™ Rating of 2.9 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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