David Deckelbaum, an analyst from TD Cowen, maintained the Hold rating on Albemarle. The associated price target was raised to $85.00.
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David Deckelbaum has given his Hold rating due to a combination of factors impacting Albemarle’s financial outlook. The company is expected to face pressure on its EBITDA margins in the near term, primarily due to a decrease in volumes sold under long-term contracts, despite a slight boost from rising spot carbonate and spodumene prices. Additionally, the anticipated long-term mine shutdowns in China, which could have led to higher lithium prices, are not materializing as expected.
While Albemarle has made significant strides in cost-cutting, achieving substantial annual savings, the company still faces challenges. The ongoing construction of CGP3 and depressed lithium prices mean that dividends from Talison are unlikely in the fiscal year 2025. Furthermore, although Albemarle is projected to be free cash flow positive in FY25, replicating this in FY26 will be challenging without a recovery in lithium prices or further cost reductions. The recent rally in ALB shares, driven by speculation of US government interest in lithium investments, adds a strategic narrative but does not offset the near-term macroeconomic weaknesses expected in the lithium market.
In another report released on October 6, UBS also maintained a Hold rating on the stock with a $85.00 price target.