Shares of specialty chemicals major Albermarle (NYSE:ALB) are under pressure today after announcing a $1.75 billion public offering of depository shares.
The company is also granting the underwriters of the offering a 30-day option to purchase additional depository shares to the tune of $262.5 million. Albermarle plans to use the net proceeds from this effort for general corporate purposes, including growth capital expenditures and repaying its commercial paper. Importantly, the company could use the proceeds to expand its lithium operations in Australia and China.
Albermarle is the largest producer of lithium globally. Last month, the company lowered its forecast for lithium demand for 2030 by 10% to 3.3 million tonnes. Over the past year, lithium prices have contracted by nearly 70%.
Amid these challenges, Albermarle outlined measures to drive growth and optimize costs earlier this year. This included scaling back its capital expenditure outlay for 2024 to the range of $1.6 billion to $1.8 billion versus $2.1 billion in 2023. The company also announced actions to trim its headcount and lower costs in the sales, general, and administrative areas.
What Is the Target Price for ALB?
Albermarle’s share price has sunk by over 50% over the past year. Overall, the Street has a Moderate Buy consensus rating on the stock alongside an average price target of $147.06.
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