Dahlman Rose Downgrades Alcoa to “Hold”; Potential Spin-off is Only Catalyst (AA)

Aluminum producer Alcoa Inc. (AA) on Thursday received a big downgrade from analysts at Dahlman Rose.

The firm cut its rating on AA from “Buy” to “Hold,” noting it sees few catalysts on the horizon. Aluminum prices are expected to remain in a tight range for the foreseeable future, and a potential spin-off of downstream operations is likely the only potential for upside.

A Dahlman Rose analyst commented, “Alcoa’s Global Rolled Products and Engineered Products and Solutions segments have performed quite well during this time, and this is where Alcoa’s future lies, in our opinion. We believe the value of Alcoa’s parts is far greater than its current share price, but do not believe that value will be realized in the company’s current form.”

Alcoa shares were mostly flat in premarket trading Thursday.

The Bottom Line
Shares of Alcoa (AA) have a 1.35% dividend yield, based on last night’s closing stock price of $8.89. The stock has technical support in the $8 price area. If the shares can firm up, we see overhead resistance around the $10.00-$10.50 price levels.

Alcoa Inc. (AA) is not recommended at this time, holding a Dividend.com 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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