Alcoa to post report as market swoon builds

SAN FRANCISCO (MarketWatch) - Alcoa Inc. will hand in its quarterly results on Tuesday, marking the onset of earnings season as dropping metals prices and the global financial crises have put Wall Street on high alert for troubling numbers. Shares of the aluminum giant have been under intense pressure in recent sessions along with just about every issue trading in the stock market. At last check, the Dow component had given up 53% since the beginning of the year while the blue-chip benchmark has dropped about 27% amid the turmoil in the financial markets. As for the third quarter, analysts polled by FactSet Research are looking for Alcoa to post profit, on average, of 54 cents a share with total revenue of $7.27 billion. Alcoa sales reached $7.4 billion in the same three-month period a year earlier. After a furious rise to their highest levels every in July on the back of heightened demand in emerging markets like China, aluminum prices have pulled back, eating into Alcoa's bottom line and leaving analysts scrambling to reassess their targets. Goldman Sachs last week cut Alcoa to neutral, blaming a price decline that could last through 2010. Analyst Oscar Cabrera pointed to a decline in Western World consumption and a slowing of China's economic growth. He did, however, forecast a rebound in metal demand in China by the end of the year or early next year at the latest. Deutsche Bank also reined in its financial targets for Alcoa in light of the pullback in metals prices and sales headwinds in the U.S. and Europe. Davenport & Company remained in the bull camp, standing by its strong buy rating on the shares but not discounting all the hurdles Alcoa currently faces. Lloyd O'Carroll, an analyst at Davenport, pared his estimates but said value investors should buy Alcoa because the company has exited poorly performing business, restructured mills in Russia and China, and will benefit from a recovery in aluminum prices next year. Alcoa said last week that it will curtail remaining production at its Rockdale, Texas aluminum smelter and lay off the remaining 660 workers. The closure will result in a $48 million charge in the third quarter, the company said.