Here's Why You Should Retain Albemarle Stock in Your Portfolio

Albemarle Corporation ALB benefits from its expansion actions to capitalize on the strong growth in the battery-grade lithium market and productivity initiatives amid challenges from soft lithium prices.

The ALB stock is down 40.3% over a year compared with the Zacks Chemicals Diversified industry’s 17.5% decline.

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Let’s find out why ALB stock is worth retaining at the moment.

Expansion Actions & Productivity Aid Albemarle

Albemarle is well-placed to gain from long-term growth in the battery-grade lithium market. The market for lithium batteries and energy storage remains strong, especially for electric vehicles (EVs), offering significant opportunities for the company to develop innovative products and expand capacity. Lithium demand is expected to grow on significant global EV penetration.

The company is strategically executing its projects aimed at boosting its global lithium conversion capacity. It remains focused on investing in high-return projects to drive productivity. Albemarle is currently focusing on the optimization and ramp-up of the Kemerton I lithium hydroxide conversion plant in Australia. The Salar yield improvement project in Chile has also achieved a 50% operating rate and is ramping to nameplate capacity. The Meishan lithium conversion facility in China has also delivered its first commercial sales ahead of schedule.

Albemarle is also benefiting from cost-saving and productivity initiatives. It is taking actions to cut costs, optimize its conversion network and increase efficiencies to preserve its long-term competitive position. Albemarle has made progress with the earlier-announced comprehensive review of its cost and operating structure. It expects the annual run-rate cost savings related to the comprehensive review to be in the range of $300-$400 million. 

ALB achieved more than 50% run rate of the cost improvement target at the end of 2024 and expects to achieve a full run rate by the end of 2025. Roughly $150 million of the target is related to manufacturing cost opportunities. The company has also lowered capital expenditures for full-year 2025 by $100 million and sees capital expenditures in the range of $700-$800 million.

Weak Lithium Prices Weigh On ALB Stock

Weaker lithium market prices are weighing on the company’s performance. Lithium prices have declined amid slowing demand growth for EVs, inventory glut and increased supply. The uncertain macroeconomic environment and high interest rates have weighed on demand. 

ALB’s revenues tumbled roughly 48% year over year in the fourth quarter, hurt by lower prices. Sales from its Energy Storage unit fell around 63% due to lower lithium market prices. Soft lithium prices are likely to continue to hurt the company’s results in the first quarter of 2025.
 

Albemarle Corporation Price and Consensus

Albemarle Corporation price-consensus-chart | Albemarle Corporation Quote

ALB’s Zacks Rank & Other Key Picks

ALB currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the Basic Materials space are Axalta Coating Systems Ltd. AXTA, Ingevity Corporation NGVT and Carpenter Technology Corporation CRS. While AXTA and NGVT sport a Zacks Rank #1 (Strong Buy), CRS carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Axalta Coating’s 2025 earnings is pegged at $2.54, indicating a rise of 12.5% from year-ago levels. AXTA beat the consensus estimate in each of the trailing four quarters. In this time frame, it has delivered an earnings surprise of roughly 16.3%, on average. 

The Zacks Consensus Estimate for Ingevity’s 2025 earnings is pegged at $4.45, indicating a rise of 26.8% from year-ago levels. The consensus estimate for NGVT’s 2025 earnings has increased by 29% in the past 60 days. 

The consensus estimate for Carpenter Technology for the current fiscal year stands at $6.95, reflecting a 46.6% year-over-year increase. CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 15.7%. 

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This article originally published on Zacks Investment Research (zacks.com).

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