Ahead of the Bell: Alcoa shares downgraded

Aluminum producer Alcoa, which releases 4th-qtr, full-year results today, downgraded

• On 7:48 am EST, Monday January 12, 2009

NEW YORK (AP) -- Aluminum producer Alcoa Inc., which recently announced production cuts amid weak commodity prices, was downgraded to "Sell" from "Buy" by an analyst ahead of the company's planned Monday earnings release.

Alcoa, which reports fourth-quarter and full-year results after the market closes, recently said it would cut 13,500 jobs, or 13 percent of its work force, and slash output as it struggles with falling demand due to the worsening recession overseas.

Analysts are expecting, on average, Alcoa to report a loss of 10 cents per share, according to a survey by Thomson Reuters.

After the market closed Friday, Deutsche Bank-North America analyst Jorge Beristain downgraded the shares because "aluminum prices remain below Alcoa's average production cost, (the company's) large net debt position (of about $9 billion and) near-term negative free cash flow."

He also lowered his price target to $8 from $10 and reduced his 2009 earnings-per-share estimate to a loss of 85 cents from a profit of 4 cents. Analysts expect a profit of 5 cents.

In premarket trading, share fell 31 cents, or 2.9 percent, to $10.50. In the last 52 weeks, the stock has ranged from $6.80 to $44.77.