Will This Downgrade Hurt Alcoa (AA) Stock?

NEW YORK (TheStreet) -- Alcoa (AA) shares were downgraded to "junk" by analysts at Fitch Ratings. The firm maintained a stable outlook for the company.

Despite the downgrade, Alcoa shares are climbing, up 0.24% to $12.57, in after hours trading on Friday.

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Analysts cited a global oversupply of aluminum as a reason for the drop.

"Alcoa ranked as the third largest primary aluminum producer in 2013. Its aluminum production is about average cost and its alumina production is in the low second quartile. The primary aluminum market has been suffering from production surpluses as new low cost capacity was added and high cost capacity was slowly curtailed. This excess supply has been soaked up by financial buyers and held in inventory," Fitch said in the note.

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Separately, TheStreet Ratings team rates ALCOA INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate ALCOA INC (AA) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its solid stock price performance. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."

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