Not only is the company's stock trading at near 52-week lows due to a brutal aluminum pricing environment, but the aluminum giant -- considered the "lead-off hitter" in each earnings season - was recently downgraded to sell by Deutsche Bank analyst Jorge Beristain, who also lowered his price target to $5.50.
Essentially, in the week Alcoa reports its third-quarter earnings results, Beristain believes the company, even at its 52-week low, is overvalued by 30%. To add insult to injury, Alcoa, long a Dow component, was recently booted out of the index.
As much as I've always liked this company and still do, I'm not going to make excuses for the company's performance or what Alcoa has become. But I disagree with those who consistently expect Alcoa to somehow manufacture growth out of thin air, especially when global demand for aluminum just isn't there.the best of a bad situation. It's true that "looking on the bright side" has been a recurring theme. But even though the Street expects Alcoa to post a 2% decline in revenue on Tuesday, I don't believe the poor aluminum industry is a valid reflection of how well-managed Alcoa really is.
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