UPDATE: Deutsche Bank Downgrades Alcoa on Deteriorating Aluminum Business Outlook

In a report published Wednesday, Deutsche Bank analyst Jorge Beristain downgraded the rating on Alcoa (NYSE: AA) from Hold to Sell, and lowered the price target from $9.00 to $5.50.

In the report, Deutsche Bank noted, “We downgrade Alcoa to Sell from Hold on the back of a deteriorating outlook for its Primary aluminum business. Our new Price Target of $5.5/share (from $9 previously) implies 32% downside from current levels. Our downgrade is primarily driven by DB's lower medium-term aluminum price outlook (12-13% lower in 2014-15 to $0.82 and $0.88/lb, respectively), which cuts 2014E and 2015E EPS by over half. In this report we postulate that Alcoa should consider spinning off Primary to reduce its negative drag and maximize equity value.”

Alcoa closed on Tuesday at $8.17.