There’s a big buying opportunity in lithium company Albemarle , according to Baird. Baird upgraded the company to outperform and raised its price target to $288 from $222, which implies a gain of 47% from Friday’s close. “ALB is down ~41% from its highs less than a year ago, and we believe that clarity on the impact of pricing, a reset of guidance, and ALB’s vertically integrated system position it as a leader for the near and longer term,” analyst Ben Kallo wrote in a Monday note. He noted that lithium prices have tumbled more than 40% year to date. Nonetheless, Baird thinks there is a significant imbalance in the supply and demand levels for lithium, particularly as stationary lithium-ion battery storage for electric vehicles rises. The reduced guidance for 2023 is “an attractive entry point for the stock,” Kallo said. The analyst added that Albemarle’s “diversity and quality of resources give it a competitive advantage on cost and ability to service several end markets. We see upside to estimates from any increase in lithium pricing, potential tailwinds from the IRA, and the growing demand for lithium.” Baird also said the oligopolistic structure in the bromine market, in which Albemarle is a top-three producer, gives the company relative pricing power. “ALB has been able to successfully implement a number of pricing increases 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 BFRs,” according to Kallo. “Additionally, ALB is a leader in catalyst products and its capacity expansion efforts in Korea and Saudi Arabia should help the company maintain its current share and also open up an expanded market potential for finished polyolefin catalysts,” he added. Shares were up 2.1% Monday during premarket trading. Meanwhile, the stock is down more than 9% in 2023. —CNBC’s Michael Bloom contributed to this report.
