Alcoa Inc. makes aluminum, so when aluminum prices drop, so do its fortunes. Goldman Sachs cut its earnings estimate for Alcoa through 2014 because of lower aluminum prices. Alcoa's share price fell more than 4 percent Thursday.
Analyst Sal Tharani wrote late Wednesday that aluminum inventory levels are high and China has more supply than it needs, while prices for the aluminum-making ingredient coke have fallen. That has pushed aluminum prices below what it costs some companies to make it.
Alcoa has been cutting costs and reducing capacity, but the issues in the aluminum market are likely to continue, Tharani wrote. He cut earnings-per-share estimates to 7 cents, down from 17 cents, for the second quarter, as well as reducing estimates for each period through full-year 2014.
On average, analysts surveyed by FactSet had been expecting a profit of 9 cents per share for the second quarter.
Tharani cut his six-month price target by $1, to $10, and left his "neutral" rating on the stock unchanged.
Alcoa shares dropped 37 cents, or 4.2 percent, to close at $8.55. They have traded in a 52-week range of $8.21 to $16.60 per share.