Is Albemarle Back After Key Analyst Upgrade?

By Chris Lange Published May 13, 11:51AM EDT

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Is Albemarle Back After Key Analyst Upgrade? — © kieferpix / iStock

Albemarle Corp. (NYSE: ALB | ALB Price Prediction) stock made a handy gain on Thursday after the company received an analyst upgrade. While the energy sector has been the primary focus of the economy recently, with the Colonial Pipeline hack, lithium provides an avenue for energy independence in the form of batteries and electric vehicles (EVs). RBC takes a closer look at this.

RBC upgraded the stock to Sector Perform from Underperform and raised the price target from $135 to $168, implying upside of 8.7% from the most recent closing price of $154.60.

Considering the recent lithium price improvement and signs of stronger EV demand, RBC made this upgrade. As EV demand continues to recover and more auto producers increase EV model lineups, the brokerage firm believes Albemarle will benefit from increased volume and pricing.

While the initial downgrade to Underperform last October was based on RBC’s view that valuations were outpacing weakened lithium fundamentals, the firm now sees the tide turning as lithium prices show firmer signs of recovery from the December lows and greater demand due to increased EV demand. The firm also believes the temporary one-year price concession likely is behind, given the tighter supply environment.

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RBC further detailed in the report:

We note that NA lithium carbonate and hydroxide prices are now up to $9,500/ton and $11,500/ton, respectively, from the December 2020 lows of $7,150/ton and $10,150/ton. Based on Benchmark Minerals, most of the pricing upside is coming from lithium supply tightness along with strong EV production demand in China and Europe (up 156.2% y/y in Europe).

As a result of higher lithium pricing and volume growth in the second half of the year, RBC is raising its fiscal 2021 EBITDA and earnings per share estimates to $835 million and $3.45 from $830 million and $3.40. Consensus estimates are calling for $3.59 per share in earnings and $3.24 billion in revenue for the fiscal full year.

Excluding Thursday’s move, Albemarle stock had outperformed the broad markets with a gain of about 161% in the past 52 weeks. However, year to date, the share price is only up about 5%.

Albemarle stock traded up about 1% on Thursday to $156.76, in a 52-week range of $56.17 to $188.35. The consensus price target is $159.57.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.