Albemarle Corporation (NYSE: ALB) has seen its stock gain 34% over the past three months. It is currently trading 13% below its 52-week high of $99.40. The market sentiment appears to be neutral towards the stock at present.
In its most recent quarter, the company saw an 8% increase in sales helped by higher volumes in Lithium, and favorable pricing in Bromine Specialties and Catalysts. Over the long term, the company plans to grow by investing in lithium and generating cash to support its lithium assets.
During the fourth quarter, Albemarle saw volume increases in battery-grade lithium hydroxide. The company is seeing a pickup in the lithium battery and energy storage market. However, due to pricing challenges in some regions, Albemarle expects to see a decline in its lithium business during 2020 compared to the previous year. The lack of new capacity will hurt volumes during the year.
Over the long term, demand for lithium is expected to grow with the advancement of new applications and the increase in electric vehicle usage. The decline in lithium ion battery costs is anticipated to support this demand.
Albemarle’s bromine specialties business is expected to benefit from strong demand in fire safety products. The company expects growth in its catalysts business to be driven by rising demand for transportation fuels and the adoption of cleaner fuels.
The specialty chemicals firm is in the process of divesting its Fine Chemistry Services and Performance Catalyst Solutions businesses and the company hopes to complete the divestitures in 2020.
Albemarle faces challenges from a volatile pricing environment, rapid changes in the electronics sector, and uneven global growth but the company believes it is well-positioned to manage these impacts.
Market experts believe the year ahead could bring some surprises and the majority of analysts have rated the stock as Hold. It has an average 12-month price target of $88.69.
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