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On Thursday, CFRA downgraded shares of Albemarle (NYSE:ALB), a global specialty chemicals company, from Sell to Strong Sell and lowered the price target to $29.00 from the previous $37.00. Currently trading at $59.32, the stock has seen analyst targets ranging from $60 to $225, according to InvestingPro data. The revised target is based on a forward price-to-earnings (P/E) ratio of 18.5 times CFRA’s 2026 earnings per share (EPS) estimate, which has been reduced by $0.41 to $1.57. The new EPS outlook reflects a significant decrease from the prior estimate, now sitting at a loss of $0.78 for 2025, down $1.18 from earlier projections.
CFRA’s decision follows Albemarle’s reported first-quarter sales drop of 21% year-over-year, continuing a challenging trend that has seen revenue decline by 44.08% over the last twelve months. The decrease in sales was attributed primarily to a 35% reduction in pricing within the Energy Storage segment, although this was partly mitigated by an 11% increase in volumes in the Specialties segment. Additionally, the company’s adjusted operating margin fell by 250 basis points year-over-year, impacted by lower pricing and sales but somewhat alleviated by reduced average input costs and continued cost reduction efforts.
The downgrade reflects CFRA’s outlook that Albemarle will continue to encounter demand and pricing challenges, particularly due to soft lithium pricing. CFRA anticipates lithium prices to remain around $10-$11 per kilogram, which is lower than their previous estimate of $13 per kilogram. InvestingPro analysis reveals that while the company maintains a healthy current ratio of 1.95, it suffers from weak gross profit margins. Furthermore, CFRA has identified Albemarle’s significant market exposure in China, which represents approximately 30% of the company’s total sales, as a potential risk amid escalating tensions between the United States and China. For deeper insights into Albemarle’s financial health and future prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which includes 10+ additional exclusive ProTips and detailed analysis.
In other recent news, Albemarle Corporation reported its Q1 2025 earnings, showing a stronger-than-expected performance with an earnings per share (EPS) of -$0.18, beating the forecast of -$0.5. However, the company’s revenue came in at $1.1 billion, slightly missing the anticipated $1.18 billion. Despite this revenue shortfall, Albemarle maintained its full-year outlook for 2025, emphasizing its strategic focus on lithium demand growth and operational efficiencies. The company achieved an adjusted EBITDA of $267 million, which was an 8% decrease year-over-year, but highlighted cost management efforts that resulted in a 20% reduction in SG&A costs. Albemarle’s available liquidity stood at $3.1 billion, and it projected operating cash flow conversion to exceed 80% for the year. The company also announced that it expects lithium demand to more than double from 2024 to 2030, driven by stationary storage and electric vehicle demand. Analysts from Bank of America and Mizuho (NYSE:MFG) Securities raised questions about the company’s lithium demand forecasts and productivity initiatives during the earnings call. Albemarle remains confident in its long-term growth strategy despite market challenges and potential supply chain disruptions.
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