Albemarle (NYSE: ALB) experienced a major setback as it became the top loser on the S&P 500, with a significant 8.7% drop to its lowest level since October 2020. This decline came after two Wall Street analysts reduced their price targets for the stock. Baird analyst Ben Kallo lowered his PT to $127 from $170 while still maintaining an Overweight rating, citing concerns about lithium prices remaining at or below Albemarle’s guidance, which could lead to a weak Q2 report for the company.
The analyst also expressed worries about the potential impact of this year’s U.S. elections on the electric vehicle market, as this directly affects lithium battery demand. Automakers may opt to hold back production or set stricter transition targets as they wait for clarity on possible changes in government EV tax credits. Additionally, UBS analyst Joshua Spector, who rates Albemarle at Hold, trimmed his price target to $109 from $124. As a result, other lithium producers like Standard Lithium, Sigma Lithium, Lithium Americas, Arcadium Lithium, and SQM also saw declines on the same day.
Albemarle shares have plummeted by over 70% from their peak in late 2022 when lithium was trading for approximately $85K/metric ton. However, current prices have fallen to about $12.5K/ton. Research firm TrendForce reported a significant drop in lithium prices last month, reaching year-to-date lows, and projects that demand for lithium will remain low in July, with prices expected to decrease to the sensitive range of 80K-90K yuan/ton ($11K-$12,375). These shifts in the lithium market have raised concerns among investors and analysts about the future of Albemarle and other related companies in the industry.
