Funtay/iStock via Getty Images
Kaiser Aluminum (NASDAQ:KALU) -5.1% in Wednesday’s trading as Wolfe Research downgraded the stock to Underperform from Peer Perform with a $67 price target, citing “less confidence of end market resilience into a downturn.”
Kaiser (KALU) shares trade at a premium multiple despite “stretched debt metrics” and the downside risk to the company’s non-aerospace end markets.
Also, Fitch Ratings downgraded Kaiser’s (KALU) long-term issuer default rating to BB- from BB with a stable outlook, citing sustained pressures on the company’s EBITDA margins.
Wolfe also downgraded Arconic (NYSE:ARNC) to Peer Perform from Outperform with a $29 price target, saying the stock looks appropriately valued following a strong YTD rise fueled by February reports of a takeout by Apollo Global Management.
A lack of opposition or updates from the company suggests Arconic (ARNC) is receptive to takeout, but a bidding war seems unlikely, according to Wolfe.
Kaiser Aluminum (KALU) is an attractive company, but “be careful about company valuation here,” Wolf Report writes in an analysis published recently on Seeking Alpha.
