Alcoa shares fall 5.10% intraday after Morgan Stanley downgrades to Equal Weight citing compressed risk premiums post-70% surge.

Alcoa (AA) fell 5.10% intraday as multiple analyst downgrades and valuation concerns pressured the stock. Morgan Stanley downgraded the stock to Equal Weight from Overweight, citing compressed risk premiums after a 70% surge and a "catalyst vacuum" near-term, while BMO Capital lowered its price target to $65 with a Market Perform rating. The downgrades signaled reduced conviction in the stock’s upside potential despite structural tailwinds like elevated aluminum prices and Midwest premiums, which were already priced in. The lack of near-term catalysts—such as the pending Pittsburgh data center conversion—left the stock vulnerable to profit-taking, particularly as its 52-week high valuation left little margin for error. A product launch (dual valve wheel) and Q4 earnings strength were offset by broader skepticism about sustained momentum. The move reflects institutional positioning shifts toward balanced portfolios rather than aggressive bets on aluminum sector growth.