Need To Know: Analysts Just Made A Substantial Cut To Their Albemarle Corporation (NYSE:ALB) Estimates

Today is shaping up negative for Albemarle Corporation (NYSE:ALB) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the latest downgrade, the current consensus, from the 22 analysts covering Albemarle, is for revenues of US$6.2b in 2024, which would reflect a disturbing 36% reduction in Albemarle's sales over the past 12 months. Statutory earnings per share are supposed to plunge 37% to US$8.39 in the same period. Before this latest update, the analysts had been forecasting revenues of US$7.4b and earnings per share (EPS) of US$12.23 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

Check out our latest analysis for Albemarle

Analysts made no major changes to their price target of US$157, suggesting the downgrades are not expected to have a long-term impact on Albemarle's valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Albemarle's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 36% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 26% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.3% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Albemarle is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Albemarle after the downgrade.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Albemarle's business, like its declining profit margins. For more information, you can click here to discover this and the 1 other flag we've identified.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.