Headquartered in North Carolina, Albemarle Corporation (ALB) is a leading specialty chemicals company. With a market cap of $9.6 billion, it produces highly-engineered specialty chemicals tailored to diverse sectors, including petroleum refining, consumer electronics, energy storage, construction, and automotive.
Shares of the specialty chemical have significantly trailed behind the broader market in the last year. While ALB has plunged 58% over this time frame, the broader S&P 500 Index ($SPX) has rallied by 19.6%. In 2024, the stock dipped 43.5%, compared to SPX’s 12% return on a YTD basis.
Taking a closer look, ALB also underperformed the iShares U.S. Basic Materials ETF (IYM), which has gained 4.1% over the past year.
After a significant 33.4% drop in Albemarle's stock price in 2023, investors hoped for a turnaround in 2024. However, the stock continued to decline, dropping another 33.9% in the first half of the year, largely due to negative sentiment and a decrease in lithium carbonate prices.
However, on Jul. 31, ALB stock rose 1.3% after the company released its Q2 earnings report. Despite beating its consensus revenue estimate, the company missed its EPS expectations by 92.5%. The company also lowered its Specialties adjusted EBITDA outlook because of a slower market rebound and increased logistics costs from the ongoing Middle East conflict.
For the current fiscal year, ending in December, analysts expect Albemarle Corporation’s EPS to fall a whopping 95.6% year over year to $0.98. The company’s earnings surprise history is grim. It exceeded the consensus estimate in only one of the last four quarters while missing on three other occasions.
ALB stock has a consensus “Moderate Buy” rating overall. Out of 24 analysts covering the stock, nine recommend a "Strong Buy," one suggests a "Moderate Buy," and 12 advise a "Hold," and two give it a “Strong Sell.”
The consensus rating is slightly less bullish than a month ago, with 12 analysts suggesting a “Strong Buy.”
On Aug. 8, Piper Sandler Companies (PIPR) analyst Charles Neivert lowered Albemarle's price target to $90 from $95 while maintaining an “Underweight” rating. The adjustment reflects the company's Q2 results, new guidance, and recent channel checks. The firm noted that global lithium prices are declining due to new capacity outstripping demand growth, a trend expected to continue for the next 12 to 18 months.
The mean price target of $121.96 suggests a 49.4% premium to ALB from current levels. The Street-high target of $200 represents an impressive upside potential of 144.9%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
