Alcoa's Stock Drops To 4 1/2-month Low After BofA Merrill Downgrade

Alcoa Inc.'s stock tumbled 4.9% in midday trade Wednesday, after Bank of America Merrill Lynch downgraded the aluminum maker, citing worsening aluminum fundamentals. Analyst Timna Tanners cut her rating to neutral, after being at buy since Sept. 30, and lowered her stock price target to $17 from $20. The downgrade coincides with BofA's lowering of its average 2015 aluminum price forecast by 7.8%, and its global average premium forecast to $300 a ton. Tanner said she no longer expects falling premiums can be offset by price strength on the London Metal Exchange. "Pressure from LME warehouse rules and Chinese exports have hurt at least the near-term outlook, eroding the premium after its [trailing 12-month] strength," Tanner wrote in a note to clients. The stock, which was down as much as 6.8% in intraday trade at a 4 1/2-month low, has now lost 16% in the past three months, while the S&P 500 has gained 1.2%.