Shares of Alcoa Inc rose more than 2 percent on Wednesday, as some analysts applauded the aluminum maker's cost cuts and results at its engineered products unit.

The rally erased a drop in share price after hours on Tuesday when the company reported a second consecutive quarterly loss.

UBS raised Alcoa's share price target to $8.25 from $7.25, noting that results in Alcoa's Engineered Products business were better than expected and that the company expects to achieve additional cost savings by the end of the year.

But BMO cut its target to $7 from $8, forecasting that based on commodity price assumptions, Alcoa faces seven quarters of losses.

S&P Equity lowered its investment rating for the company to sell from hold.

After the market closed on Tuesday, Alcoa reported a first-quarter net loss of $497 million, or 61 cents per share, compared with a profit of $303 million, or 37 cents per share, in the same quarter of 2008.

But Chief Executive Officer Klaus Kleinfeld said there were signs of bottoming or stabilizing in its end markets, even though it projects weak global demand for aluminum this year.

Cost-cutting in the quarter was more than I expected, said analyst Charles Bradford of Bradford Research, who changed his full-year estimate for Alcoa to a loss of $1.50 from a loss of $2.10.

But Tony Rizzuto of Dahlman Rose lowered his 2009 estimate to a loss of $1.00 from a loss of 45 cents due to a more restrained outlook for 2009.

While we do remain somewhat concerned about the prospects for aluminum over the near to intermediate term, we believe the longer-term outlook remains somewhat more positive, and Alcoa should trade along with these industry fundamentals, he wrote in a research note.

In morning trading on the New York Stock Exchange Alcoa stock was up 10 cents at $7.89.

(Editing by Derek Caney)