Albemarle Shares Hit All-Time High on Solid 2022 Earnings Forecast

Albemarle shares hit a fresh record high on Friday after the largest producer of lithium forecast a sharp jump in adjusted core earnings for 2022, largely due to higher pricing and volumes for Lithium and anticipated stronger performance for catalysts following previous pandemic-related weakness.

The Charlotte, North Carolina-based company forecasts full-year 2022 adjusted core earnings to jump 25%-35% compared to 2021.

Moreover, Albemarle introduced its 2026 adjusted EBITDA forecast, which ranges between $2.2 billion and $2.6 billion. Adjusted EBITDA is expected to be between $810 million and $860 million in 2021.

Following this, Albemarle shares hit an all-time high of $252.97, rising about 4% on Friday. The stock has surged nearly 70% so far this year.

“We see exciting growth opportunities ahead for Albemarle, primarily driven by the importance of electrification in the transition to more sustainable sources of energy,” said Albemarle CEO Kent Masters.

“We are actively implementing our structured operating model, the Albemarle Way of Excellence, to help ensure we successfully achieve our strategic goals. With our focus on sustainable practices, our access to world-class resources, and our position as an industry leader, we aim to maintain a leadership position in all our businesses to serve our customers’ growing needs and create shareholder value well into the future.”

Analyst Comments

“Albemarle will struggle to grow its lithium EBITDA over time as the continued reset in its lithium contract prices that we expect (whether the reset continues gradually in 2022+ as in 2020 and 2021, or suddenly in 2022) is likely to offset volume growth,” noted Vincent Andrews, Equity Analyst at Morgan Stanley.

“The lack of free cash flow through 2022 (MSe) raises questions about how aggressively Albemarle will pursue future lithium volume growth and/or how it will fund it. As it becomes apparent that contract lithium prices will not revert to prior peaks, we expect lithium to derate from >40x to ~16.5x EBITDA, in line with industrial gas (IG) companies.”

Albemarle Stock Price Forecast

Twelve analysts who offered stock ratings for Albemarle in the last three months forecast the average price in 12 months of $230.08 with a high forecast of $280.00 and a low forecast of $127.00.

The average price target represents a -7.15% change from the last price of $247.81. From those 12 analysts, seven rated “Buy”, three rated “Hold” while two rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $80 with a high of $200 under a bull scenario and $60 under the worst-case scenario. The firm gave an “Underweight” rating on the company’s stock.

Several other analysts have also updated their stock outlook. Jefferies raised the target price to $280 from $260. Berenberg lifted the price objective to $280 from $115. Cowen upped the price target to $260 from $180.

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