EU and US could reach trade deal this weekend - Reuters
On Tuesday, Berenberg analysts reduced the price target for Albemarle Corporation (NYSE:ALB), a major player in lithium production, from $92.00 to $74.00, while maintaining a Hold rating on the stock. This adjustment comes after Albemarle reported robust first-quarter earnings on April 27, 2025, which surpassed EBITDA expectations by more than 30%. The stock has faced significant pressure, declining over 42% in the past six months, with InvestingPro data showing current trading at $61.57. Despite the strong performance, Berenberg does not foresee an immediate improvement in the stock’s short-term prospects.
The firm attributes its revised price target to the continued softness in lithium prices, which are currently trading around $9,500 per tonne of lithium carbonate equivalent (LCE). Berenberg also predicts a disappointing second quarter for Albemarle, expecting EBITDA to be 30% below the current consensus. According to InvestingPro analysis, the company’s gross profit margins have weakened to just 3.93%, while maintaining strong liquidity with a current ratio of 2.11.
Analysts at Berenberg believe that Albemarle’s stock will struggle to outperform until there is a recovery in lithium prices. The company is not expected to generate positive cash flow in 2025, even with $350 million in pre-payments. According to Berenberg, Albemarle would need to fully ramp up its production facilities just to break even at the prevailing lithium prices.
The market valuation of Albemarle currently implies an anticipation of a significant rebound in lithium prices. The stock is trading at approximately 16 times its projected 2025 earnings before interest, taxes, depreciation, and amortization (EV/EBITDA). Berenberg expects this multiple to contract to a single-digit figure as the lithium market tightens and prices begin to climb.
In other recent news, Albemarle Corporation reported its Q1 2025 earnings, revealing an EPS of -$0.18, which surpassed the forecasted -$0.5, though revenue slightly missed expectations at $1.1 billion compared to the anticipated $1.18 billion. Despite the revenue shortfall, Albemarle maintained its full-year outlook for 2025, emphasizing its strategic focus on lithium demand growth and operational efficiencies. Meanwhile, Scotiabank (TSX:BNS) adjusted Albemarle’s price target from $75.00 to $65.00, retaining a Sector Perform rating amid a reassessment of the lithium market, suggesting a lower price environment than previously anticipated. The firm’s revised EBITDA forecast for 2026 stands at $1.1 billion, down from the earlier consensus of $1.3 billion. Additionally, CFRA downgraded Albemarle’s stock rating to Strong Sell, reducing the price target to $29.00 from $37.00, following a reported first-quarter sales drop of 21% year-over-year. This downgrade reflects CFRA’s outlook that Albemarle will face continued demand and pricing challenges, particularly due to soft lithium pricing. In terms of shareholder returns, Albemarle declared its 126th consecutive quarterly dividend, maintaining a payout of $0.405 per share, translating to an annualized payout of $1.62 per share.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.