On Thursday, KeyBanc Capital Markets adjusted its outlook on Albemarle Corporation (NYSE:ALB), a leading producer of lithium for electric vehicle batteries, by reducing its price target to $159 from the previous $178. The firm retained its Overweight rating on the stock.
The revision follows Albemarle's recent financial activities, which include the announcement on Sunday of its plans to offer $1.75 billion in convertible preferred equity. This offering was subsequently increased on Tuesday to $2 billion. Additionally, Albemarle has provided the underwriters a 30-day option to purchase up to an extra $300 million of shares.
The settlement for this transaction is scheduled for Saturday, at which point Albemarle will issue 2 million shares of Preferred Stock. These shares come with a mandatory conversion date set for March 1, 2027. If the underwriters opt to fully exercise their purchasing option, an additional 0.3 million shares will be issued. The total proceeds from the offering are anticipated to range between $1.94 billion and $2.24 billion.
The financial maneuver is expected to result in a dilution of approximately 16% based on the current stock price. However, this dilution could be reduced to 14.9% if the stock price of Albemarle exceeds $131.27 at the time of the mandatory conversion. The offering and price adjustment reflect the company's strategic efforts to raise capital, which will have an immediate impact on its share structure and valuation.
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