BMO analyst downgrades Alcoa shares on outlook

A BMO Capital Markets analyst downgraded shares of Alcoa after the aluminum maker gave its latest business outlook.

THE OPINION: Analyst Tony Robson cut the stock to "Market Perform" from "Outperform." After rising nearly 40 percent since late August, the shares are close to Robson's target price of $14.

Alcoa recently held its investor meeting in New York and outlined trends that will affect its business the next few years. It set revenue-growth targets for its business segments and set a modest goal of debt reduction.

Robson said in a note this week that Alcoa's forecast of growing demand for aluminum relies mostly on China and other Asian markets, far from the company's smelters in North America. He also discounted Alcoa's expectation of a balance in aluminum supply and demand, saying he expects a surplus and growing inventories that could push prices lower.

The analyst called aluminum BMO's "least preferred commodity," and said that investors who want to stay in the metal should switch to Rio Tinto PLC, which BMO rates "Outperform."

THE STOCK: Alcoa shares fell 7 cents to $13.81 in morning trading. They have ranged between $9.81 and $17.60 in the past year.