Baird believes that rising lithium prices and resilient demand will drive further upside for Albemarle , even after its incredible rally over the last 12 months. The investment firm upgraded the chemical manufacturer to outperform from neutral. Baird analyst Ben Kallo also nearly doubled his price target to $210 from $113. Shares of Albemarle have jumped 76% over the past year. Kallo’s updated target implies another potential upside of 33% ahead for the stock. ALB 1Y mountain ALB 1Y chart The analyst wrote that his price target is justified due to near-term supply and demand dynamics, Albemarle’s China exposure and recent strength within storage end markets. One catalyst behind Kallo’s upgrade is a recent increase in lithium prices, now over $15 per kilogram and up from $11 per kilogram a month ago. The analyst noted that this price increase could be due to strong end market demand from stationary storage, alongside a rationalization of supply within China. “We do not foresee a slowdown in storage demand in the near term and note that ALB’s business has significant leverage to lithium price increases, particularly after recent cost-cutting initiatives,” he wrote. Besides lithium demand staying persistent, the analyst also applauded Albemarle’s strong presence in multiple markets with defensible positions. This includes catalyst products, a business with solid demand, Kallo wrote, that he also recommends investors own. Meanwhile, the oligopolistic nature of the bromine market has also warranted Albemarle some relative pricing power, meaning it has been able to successfully raise prices in recent years. “This pricing power should allow ALB to pass along higher costs of production to its customers and also help to partially offset any near-term softness in demand for electronics products using [brominated flame retardants],” Kallo wrote. Importantly, we like the setup around bromine as sentiment is somewhat negative, and we believe there is upside potential if the segment outperforms expectations.
