The firm also lowered 2015 earnings estimates to $0.74 from $0.83 per share, with 2016 and 2017 earnings estimates to $0.88 from $1.10, and $1.14 from $1.31, respectively.
Morgan Stanley said it lowered its earnings estimates because all-in aluminum prices, including regional premiums, are now near a six-year low.
"Upstream performance should be near a trough at current prices, which should help shift focus to the higher-multiple earnings from downstream portfolio," Morgan Stanley analysts said.
However, the firm expects the portfolio of Alcoa will be boosted by recent acquisitions related to aerospace products and new capacity investments in automotive, according to the analyst note.
Alcoa is engaged in lightweight metals engineering and manufacturing that operates in four segments: Alumina, Primary Metals, Global Rolled Products, and Engineered Products and Solutions.
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. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and poor profit margins."