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Albemarle Accelerates Toward De-Levering, Growth Story On Track

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Albemarle Accelerates Toward De-Levering, Growth Story On Track
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Albemarle Corporation (NYSE: ALB)'s Chemetall sale "accelerates path to de-levering." Citi Bank's P.J. Juvekar reiterates his Buy rating on Albemarle, the top pick on Citi's focus list, with a price target of $89.

The company's surface treatment (Chemetall) business was bought at a fair price, Juvekar noted. The sale produced roughly $2.8 to $2.9 billion after tax proceeds. The extra cash should allow the company to meet its goal to de-lever from 3.6x EBITDA to 2.25 EBITDA by the end of 2017 by reducing its $1.2 billion of debt.

With the extra cash flow the company's "next priorities for cash deployment would be: returning cash to shareholders through buy-backs or cash dividends and reinvesting the net proceeds into its Lithium business," Juvekar stated. The analyst sees the growth story to be ahead of schedule and the sale of Chemetall improves Albemarle's race to corner the Li market.

Related Link: Albemarle's Sale Of Surface Treatment Unit "Furthers Compelling Lithium Growth Story"

Nimbler To Capture Li Growth

  • Albemarle is planning to start a third 26kta Li carbonate plant in La Negra, Chile. The original start date was set for some time in 2020, but could not accelerate this timeline.
  • The company is also planning on bringing online a spodumene conversion facility with 50kt Li carbonate and Li hydroxide capacity.

Latest Ratings for ALB

DateFirmActionFromTo
Mar 2017CitigroupDowngradesBuyNeutral
Feb 2017RBC CapitalInitiates Coverage OnOutperform
Jan 2017BairdUpgradesNeutralOutperform

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