NEW YORK (TheStreet) -- Even though aluminum prices have strengthened sharply since 2009, Alcoa (AA) has been unable to take full advantage, according to an analyst at Deutsche Bank, which downgraded shares of the aluminum smelter and recycler ahead of the company's first-quarter earnings report next week.

Jorge Beristain, the firm's metals and mining analyst, cut his rating on Alcoa shares to hold from buy and his price target to $18 from $25. He also trimmed his 2010 per-share earnings forecast to 64 cents from $1.02. The consensus among Wall Street analysts for Alcoa's 2010 profit stands at 83 cents a share, according to a survey of the sell side by Thomson Reuters.

Beristain isolated a set of "execution headwinds" facing Alcoa in the near term. For one thing, higher energy costs will pressure the company's results, along with the accounting impact of rising aluminum prices on the cost of goods sold.

The analyst noted that several smelters in Italy, which Alcoa had taken a charge to idle last quarter, still haven't been turned off. Thus, the company has yet to see the full benefit from shutting down an unprofitable operation.

Beristain also said Alcoa has likely experienced a decline in sales volumes as it continues to negotiate contracts with two huge aluminum customers -- PepsiCo ( PEP) and Anheuser Busch-Inbev ( BUD). The supply contracts, which had ten-year terms, lapsed in 2009.

For the just-ended first quarter, which Alcoa is scheduled to report after the closing bell on April 12, Beristain expects the company to report earnings of 10 cents a share. That would represent a disappointment. Analysts, on average, are expecting Alcoa to earn 15 cents a share in the quarter.

In an interview with TheStreet Monday morning, Beristain said that Wall Street's consensus earnings targets for the next 12 months may consequently need to be revised lower.

Beristain emphasized that the Alcoa downgrade Monday was a "company specific" call. Deutsche Bank's house view on aluminum itself, and on commodities in general, remains unchanged, he said. The firm, of which Alcoa is an investment-banking client, expects the price of aluminum to tread water at around $1 a pound for the rest of 2010.

Monday morning, Alcoa shares were trading flat with the previous session's close at $14.70 on volume of about 13 million shares. Daily turnover in the stock averages 40.8 million shares.

-- Written by Scott Eden in New York

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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.

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