It's been four months since chemicals giant FMC spun off its lithium-producing subsidiary Livent (NYSE:LTHM) as a separate company. Three months ago, Wall Street bankers who underwrote that transaction urged investors to buy Livent stock -- and I warned investors against taking that advice.
Today, those who took Wall Street's advice are paying the price. Livent reported its fourth-quarter results last night, and as of 11:15 a.m. EST, the stock is down 7.5%.
It's not hard to figure out why.
Wall Street had told investors to expect $0.23 per share in earnings out of Livent in Q4, and sales of $124.3 million. Instead, Livent reported profits of just $0.18 per share, and sales of only $119.8 million.
CEO Paul Graves pointed out that Livent's results were "in line with our prior expectations." That doesn't change the fact, though, that the company's bankers had promised more -- and that Livent failed to deliver.
And things could get worse before they get better. Issuing new guidance for fiscal Q1 2019, Livent told investors to expect sales in a range of $95 million to $105 million -- $100 million at the midpoint. That's a good 20% below the $124.3 million in sales that Wall Street had been forecasting. Furthermore, Livent's projected Q1 profit of between $0.11 and $0.14 looks like it will fall nearly 50% below analyst projections for $0.24 per share.
Given how bad the numbers look, I'm not at all surprised to see Livent stock falling. And I wouldn't be surprised if it were to fall more.