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Fly News Breaks for February 7, 2020
TSLA, ALB
Feb 7, 2020 | 07:35 EDT
The recent rise in Tesla (TSLA) shares has led to a further overvaluation of Albemarle (ALB), JPMorgan analyst Jeffrey Zekauskas tells investors in a research note. The analyst does not think changes in the value of Tesla, the leading electric vehicle manufacturer, should have much bearing on changes in the valuation of Albemarle, the leading supplier of lithium for electric vehicle batteries. The market expects Tesla's EBITDA generation to rise sharply from $2.7B in 2019 to $4.3B in 2020 and to $6.2B in 2021, Zekauskas points out. Albemarle's EBITDA, by contrast, is likely to shrink about 10% in 2020 because of poor pricing in an oversupplied lithium market, he contends. Further, Zekauskas sees risks to Albemarle's EBITDA in 2020 should it find itself having to renegotiate its favorable above-market long term lithium contracts. He keeps an Underweight rating on Albemarle shares with a $60 price target.
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