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Fitch Ratings downgraded Kaiser Aluminum's (KALU) long-term issuer default rating to BB- from BB, with a stable outlook, considering sustained pressures on the company's EBITDA margins.
The company did not provide FY23 consolidated adjusted EBITDA outlook in its Q4 results. Q4 non-GAAP EPS and revenue had missed consensus estimates.
KALU stock was trading ~6% down on Wednesday morning as Wolfe Research had also lowered its rating on the company to Underperform from Peer Perform.
The stable outlook reflects the agency's view that the company's margins will likely improve over the next 12-24 months, given that the supply chain challenges and cost headwinds are gradually resolved.
Kaiser Aluminum's unsecured notes were downgraded to BB-/RR4 from BB/RR4 and asset-based loans to BB+/RR1 from BBB-/RR1.
KALU has negative EPS revisions and decelerating momentum when compared to other Materials stocks, to the point that it gets a Sell rating from Seeking Alpha's Quant Rating system.
The company's 3-month stock performance is -16.81%, while the Materials sector median is -2.99%.
Here is a look at the company's 1-year performance, compared to peers:
Meanwhile, the sell-side analysts give KALU stock a Hold rating, with an average price target of $82.33.
SA authors also give the stock a Hold rating on an average.
KALU is an absolute Buy at the right price, according to SA columnist Wolf Report, who says that there are better options.