Albemarle shares touched a three-year low on Tuesday after Baird analyst Ben Kallo noted concerns about weak lithium pricing and the company’s second-quarter earnings.
Shares of the lithium miner were recently down 6.5% to $92.64, after falling to $91.21. The stock has fallen about 36% this year. Kallo lowered the price target on the shares to $127 from $170.
Kallo said in a research note that he believes the company will have a weak second quarter and revise its estimates downward to reflect a slower recovery in lithium pricing and demand for electric vehicles.
The analyst sees second-quarter earnings of zero cents a share, compared with a consensus estimate of 60 cents a share. For 2024, he expects EPS of $1.96, versus a consensus of $3.14.
Although the Baird analyst said data on EV deliveries, strong China sales data, and original equipment manufacturers maintaining EV transition targets might represent a turn in EV sentiment, he thinks the potential risk to the tax credit for new and used EVs, depending on the outcome of the U.S. elections, is a negative for the company.
Kallo said manufacturers might hold off on increasing production or committing to more stringent transition targets until they have more clarity after the election.
“We are cautious into the quarter but remain constructive on ALB’s market positioning and long-term setup,” Kallo said.
Write to Zaeem Shoaib at zaeem.shoaib@wsj.com