(By Balachander) Albemarle Corp. (NYSE: ALB) shares were downgraded to "Hold" from "Buy" by Deutsche Bank (DB) owing to a lack of near-term catalysts.
The bank, which raised price target on the stock to $70 from $64, said 2013 EPS will be back-end loaded and valuation, while not stretched, is nonetheless fair at 13.2x 2013E EPS.
DB wrote it sees no signs of structural deterioration in Albemarle's core bromine or catalyst franchises.
"Most disappointing in the near-term is that Catalysts, which was expected to have a 'step-out' earnings year in '13, is seeing the step shortened due to a number of factors (e.g. less favorable HPC mix, FCC customer turnarounds)," the bank wrote in a note.
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"With 1H '13E EPS down 17%, YoY, we believe the shares will be range-bound in the near-term," DB said.
Given a tepid macro backdrop, DB said it is lowering its 2013E EPS by $0.05 to $4.90, up 1 percent, and establishing a 2014E EPS of $5.50, up 12 percent.
The brokerage expects Albemarle to announce a $200MM-plus share buyback plan shortly (and to complete it in Q2) as its balance sheet is strong (negative net debt by y/e 2013E) and there is a lack of acquisition candidates.
Baton Rouge, Louisiana-based Albemarle is engaged in the development of highly-engineered specialty chemicals for consumer electronics, petroleum refining, utilities, packaging, construction, automotive/transportation, pharmaceuticals, among others.
Shares shed 3.22 percent to trade at $62.62 on Thursday. Over the past year, the stock has been trading between $50.88 and $68.51.