2024-06-12 09:00:00 ET
Summary
- Albemarle continues to be a Hold, thanks to the moderating lithium spot prices and upcoming supply glut as EV demand and solar installations decelerate.
- With the macroeconomic outlook still uncertain and a near-term turnaround unlikely, we believe that this is not the right time to invest in commodity stocks.
- This is especially since ALB reports impacted top/bottom lines, with the management having had to embark on stock offerings to bolster the balance sheet and, potentially, sustain its dividend payouts.
- Unlike SQM, ALB does not pay variable dividends tied to Free Cash Flow generation, implying that most of its investment thesis will be attributed to capital appreciation linked to spot prices.
- With more opportunities out there, ALB is only suitable for traders looking to swing trade between its established support levels of $110s and resistance levels of $130s.
ALB's Prospects Remain Impacted, As Lithium Demand Wanes
We previously covered Albemarle Corporation ( ALB ) in March 2024 with a Hold rating, discussing the company's uncertain prospects ahead, as EV and energy storage demand waned, borrowing costs rose, and the macroeconomic outlook remained uncertain in the intermediate term.
While we had been optimistic about lithium's long-term prospects, it was apparent that there might be more near-term pain, with the supply glut persisting and spot prices unsustainable for miners....
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Albemarle's Lithium Prospects Remain Mixed - More Opportunities Elsewhere