** Shares of British auto parts supplier Dowlais DWL.L marginally down at 76.75p

** RBC Capital Markets downgrades stock to "sector perform" from "outperform"

** Earlier this year, co announced it will be acquired by U.S. rival American Axle & Manufacturing AXL.N in a $1.44 billion deal, which is expected to close in the fourth quarter

** Brokerage believes American Axle’s offer likely undervalues Dowlais, but with the deal in place for over six months and a Q4 close still expected, sees completion as the most probable outcome

** Brokerage raises PT to 77p from 70p, which is in line with the stock's last close on Monday

** Average rating from seven analysts is "hold"; median PT is 74p - data compiled by LSEG

** As of last close, DWL stock is up nearly 14% YTD

(Reporting by Akriti Shah in Bengaluru)

((akriti.shah@thomsonreuters.com))