UPDATE: Alcoa Shares Rise After Upgrade, Equity Offering

SAN FRANCISCO (Dow Jones) - Alcoa Inc. shares rose almost 10% Thursday after J.P. Morgan told investors it's time to buy now that the aluminum maker has positioned itself to weather 2009 by curbing its quarterly payout and raising cash through an equity offering. In midmorning trades, Alcoa (AA) stock was up 53 cents at $6.01. Still, the Dow component has lost 83% in the past year, wilting as the recession spread through the construction and manufacturing industries, sapping demand for aluminum and prompting a string of analyst downgrades. Alcoa on Thursday detailed the cash-raising efforts it announced earlier in the week, saying it will bring in $1.3 billion through the sale of common stock and convertible notes. The company said it will sell 150 million shares of common stock at $5.25 per share as well as $500 million of 5.25% convertible notes due 2014. J.P. Morgan analyst Michael Gambardella upgraded the stock to overweight from neutral, and lifted its price target to $12 a share from $8. He said headwinds in the aluminum market could persist through 2009, but that Alcoa's equity will soon look toward 2010. "With the equity offering out of the way and the dividend finally cut, we believe the two biggest potential shoes to drop for the stock are now in the share price and the company has bought itself a year's worth of liquidity insurance to make it comfortably through 2009," he said. Alcoa shares took a hit earlier this week after the company cut its quarterly payout to 3 cents a share from 17 cents, in a move expected to save more than $ 400 million a year.