Albemarle’s lithium products help power the world’s growing fleet of electric vehicles.
Logan Cyrus/Bloomberg
More electric vehicles are being made and sold. More lithium is being used for batteries, and that’s good for the world’s biggest lithium miner,
Albemarle.
Albemarle
(ticker: ALB) on Tuesday told analysts and investors that it sees industry production volumes up about fivefold from 2022 to 2030. The company itself plans to triple capacity by 2027.
It was a strong outlook, and one of the reasons Piper Sandler analyst Charles Neivert launched coverage of Albemarle stock on Wednesday evening with a Buy rating and $310 price target. That’s a reflection of Albemarle’s strong earnings, which could grow at more than 20% a year on average between 2022 and 2024.
“Growth in EV production is the single biggest driver for ALB shares over at least the next 3 to 5 years,” Neivert writes in a research report. “Albemarle is well positioned to continue to participate in the market growth.”
Still, Albemarle stock trades for about 10 times 2024 earnings, well below the
S&P 500
‘s 16 times. And even at Neivert’s target, Albemarle would trade for just around 12 times 2024 estimates.
That’s a reflection of lithium prices, which are elevated relative to history. Benchmark lithium prices are at about $60,000 a metric ton, up from pandemic prices of less than $10,000 a ton. No one expects lithium prices to stay up here. “The urgency around lithium supply will diminish,” adds Neivert. “We still see lithium prices remaining well above historical values of 2021-2022.”
The question is how much. Evercore ISI analyst Stephen Richardson believes prices will average about $30,000 a ton in the long run. He also rates Albemarle stock Buy. His price target is $295 a share.
Other analysts left the event feeling optimistic about Albemarle stock. Thursday, Mizuho analyst Christopher Parkinson raised his price target on Albemarle stock to $325 from $300. Earlier in the week, analysts at Deutsche Bank, Oppenheimer, RBC, and Baird all raised targets as well.
The average analyst price target for Albemarle stock is now about $311, up from about $250 at the start of 2022.
Overall, 62% of analysts covering Albemarle rate shares at Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 58%.
Albemarle stock is up 2.9% in Thursday trading, while the S&P 500 and
Dow Jones Industrial Average
are up about 0.5% and 0.2%, respectively.
Albemarle stock is up more than 11% for the week. Other lithium-mining stocks have moved as well.
Livent
(LTHM) and
SQM
(
SQM
) shares are up both up about 9%. week to date.
Write to Al Root at allen.root@dowjones.com
Credit: marketwatch.com