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The analysts told investors that the 2023 reset creates a good entry point for the best growth opportunity in chems. In addition, the analysts believe a lot of the risks are already priced into the stock.
“We see the current inflection in China Lithium pricing and 2023 earnings reset leading to increasingly positive sentiment on the stock,” wrote the analysts.
“Lithium is ~85% of ALB’s EBITDA and lithium prices in China are down >50% from peak levels in Dec-22, while ALB stock is down ~35%. We estimate ALB stock is pricing in close to $20/kg long-term realized lithium pricing (vs $23/kg UBSe), and 2030e volumes ~10% below our estimates.”
UBS estimates ALB is pricing in ~$20/kg lithium prices, which would be the high end of the cost curve, “but not high enough to drive investments to close a potential 1 mil ton lithium supply gap by the end of the decade.”
“Even in a scenario where Chile limits resource access (which we deem unlikely), by 2030e ALB will likely have ~365K ton in resource capacity ex-Chile,” concluded the analysts.
