On Friday, BMO Capital Markets sustained its optimistic stance on Albemarle Corporation (NYSE:ALB), a leading chemical company, maintaining an Outperform rating and a $150.00 price target for the stock. The firm's assessment follows a review of Albemarle's performance subsequent to the company's second-quarter earnings release earlier in the season.
The firm's analyst noted adjustments to the model, which included a slight decrease in the estimated earnings for 2024. Despite this revision, the estimates remain aligned with the consensus.
Looking ahead to 2025, the firm's projections, although reduced, are still higher than the consensus. This outlook is based on the expectation of a rebound in lithium prices to an average selling price (ASP) of $19,000 per tonne next year, a scenario that is currently not widely anticipated in the industry.
The price target of $150 set by BMO Capital Markets is based on approximately 18 times the projected 2024 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) and about 11 times the projected 2025 EV/EBITDA, assuming some recovery in lithium prices in the coming year.
BMO Capital Markets remains positive on Albemarle's prospects despite recent challenges in the market. The analyst expressed a belief that the market's sentiment has overly skewed in one direction, suggesting a potential rebound.
The firm's position indicates confidence in the company's future performance and the lithium market's dynamics.
In other recent news, Albemarle Corporation has experienced a series of adjustments in its stock price targets by various financial firms. Deutsche Bank (ETR:DBKGn) lowered its target to $80 while maintaining a Hold rating, citing the company's expectation to maintain its anticipated lithium pricing scenario despite a drop in lithium prices.
Similarly, Piper Sandler reduced its price target from $95 to $90, maintaining an Underweight rating due to a downward trend in the global lithium market. RBC Capital also adjusted its target to $111, despite maintaining an Outperform rating, citing a delay in the upturn of lithium prices.
KeyBanc Capital Markets also revised its price target from $151 to $132, maintaining an Overweight rating, reflecting Albemarle's strategic response to ongoing challenges in the lithium market.
These developments follow Albemarle's announcement of a 40% decline in net sales in Q2 2024, with revenues totaling $1.4 billion.
Albemarle's peer, Arcadium Lithium, is reassessing its Mount Cattlin operations in Western Australia due to falling lithium prices and increased production costs. This move is part of Albemarle's wider review of its cost and operating structure. Despite these challenges, some companies like Liontown Resources (ASX:LTR) and Pilbara Minerals continue to increase production.
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