Shares of Alcoa Inc. (AA) fell 7 percent Tuesday after the world's largest aluminum producer posted lower quarterly profit on a raft of one-time items that caught some investors by surprise.

UBS (UBS) downgraded the stock on valuation concerns, and CSFB said the poor results made its "outperform" rating on the stock "increasingly difficult to support."

Merrill Lynch, however, said any weakness in the shares was a buying opportunity, and Citigroup said Alcoa should be rewarded over the long term.

Shares of Alcoa, the first component of the Dow Jones industrial average to report results this quarter, dropped $2.15 to $28.40 in early trade on the New York Stock Exchange.

Since May 1999, when Alain Belda became Alcoa's chief executive, Alcoa shares are down 1.9 percent, compared with gains of 2.1 percent for the Dow and 33.4 percent for Alcoa rival Alcan Inc.

On Monday, Alcoa reported a 16 percent decline in quarterly profit, weighed down by a number of items, including hurricane-related production cuts, unplanned outages and maintenance and labor issues in Australia.

Citigroup said the result was "consistent with (Alcoa's) pattern of earnings shortfalls," but it found positives in some of the underlying margin and growth prospects. "(Alcoa) should eventually be rewarded as one of few major Metals (companies) with organic growth," it said

Yet investors worried that Alcoa's cost pressures were not lessening, as evidenced by the fact that revenue rose 12 percent in the quarter even as profits fell.

UBS raised its price target on Alcoa shares to $34.50 from $33 but cut its rating in the stock to "neutral" from "buy," given the implied return on the shares.

But Merrill Lynch (MER) called the results "commendable" in light of cost pressures, saying that excluding one-time items, the company missed the average Wall Street profit forecast by just 2 cents a share. But it acknowledged that the stock would sell off.

"We believe this will create a buying opportunity because any sell-off does not take into account the significant cash generation capacity or growth prospects of the company," analyst Daniel Roling said in a note.