Morgan Stanley analyst Carlos De Alba made a series of rating changes in the firms coverage of the Americas Metals & Mining sector.
Given an impressive run-up in commodity shares in recent months on the back of rising inflation and geopolitical conflicts, De Alba said it is time to take some chips off the table.
The analyst downgraded Alcoa (NYSE:AA) from Overweight to Equal Weight with a $78.00 per share price target (down from the prior $100.00) as he sees limited company-specific positive catalysts in the near term.
"Alcoa has taken steps to materially improve its balance sheet and shore up profitability through its asset portfolio review, and the company is well positioned to benefit from a constructive outlook for aluminum due to tightening global aluminum supply. However, we think these positive development are already in the price after the stock's strong outperformance," De Alba said in a client note.
Similarly, the analyst also cut Southern Copper Corp (NYSE:SCCO) to Underweight from Equal Weight with a $55.00 per share price target, down from $63.00.
"We believe the company's challenging production outlook, rising costs, and ongoing protest activities in Peru - which resulted in the stoppage of the company's Cuajone mine - will weigh on the stocks investment case. We see downside to our new price target following the shares' recent performance - the stock is up ~15% YTD, relatively in line with other major pure copper names and outperforming copper - and despite our commodities teams higher copper price forecasts now in our SCCO estimates."
AA and SCCO shares are up 56% and 26% YTD, respectively.
By Senad Karaahmetovic