Alcoa Shares Climb on Morgan Stanley Upgrade

Dec. 21 (Bloomberg) -- Alcoa Inc., the largest U.S. aluminum producer, gained in New York after a Morgan Stanley analyst boosted his rating on the shares to “overweight” because of improving profitability in both alumina and some aluminum products. Alcoa rose $1.15, or 7.9 percent, to $15.73 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have increased 40 percent this year. Morgan Stanley predicts aluminum prices could rise to $1.11 per pound, Mark Liinamaa said in a report today. Aluminum for delivery in three months rose to about $1.02 a pound on Dec. 18 on the London Metal Exchange. Alcoa may also benefit from higher rates for alumina, a key feedstock for the metal. “The shares have rallied with the aluminum price, but we think further upside remains in an economic recovery scenario,” Liinamaa wrote. “We see higher linkage rate for alumina and long-term earnings potential in midstream and downstream assets not reflected in the current stock price.” To contact the reporter on this story: Edmond Lococo in Boston at elococo@bloomberg.net.