Chilly lithium prices return, JPMorgan lowers earnings forecast for Albemarle (ALB.US) and cuts target price to $140

According to Jinzi Finance APP, due to the continued weakness in lithium prices, JPMorgan has significantly lowered its earnings forecasts and target price for the global lithium giant Albemarle (ALB.US). As a result, Albemarle’s stock closed down 5.89% on Tuesday, making it one of the worst-performing constituents in the S&P 500 index that day.

JPMorgan analyst Jeffrey Zekauskas maintained a “Neutral” rating on Albemarle in a recent report, but lowered the stock’s target price from $160 to $140. The bank stated that its 2026 adjusted EBITDA forecast for Albemarle has been reduced from $3.37 billion to $2.88 billion, a decrease of 14.4%; and its 2027 adjusted EBITDA forecast has been lowered from $3.59 billion to $2.93 billion, a decrease of 18.4%.

The adjusted earnings per share forecasts were also lowered accordingly. The 2026 forecast was cut from $14.20 to $12.05; the 2027 forecast from $15.35 to $11.65.

The bank pointed out that these adjustments mainly reflect the weakening outlook for lithium prices. Data shows that in the second quarter, the average price of lithium carbonate in China was $24,810 per ton, but the average so far in the third quarter has fallen to around $21,625. JPMorgan now expects lithium prices to remain just above $20 per kilogram, compared with previously modeling mid-$20 per kilogram levels.

JPMorgan believes Albemarle’s earnings are highly sensitive to lithium price fluctuations. The bank estimates that for every $1/kg change in lithium price, Albemarle’s annual EBITDA changes by approximately $250 million. This means the assumption change from mid-$20 per kilogram to just above $20 is enough to explain the multibillion-dollar reduction in their long-term EBITDA forecasts.

JPMorgan also expects Albemarle’s third quarter adjusted EBITDA to be $668 million, down from $858 million in the second quarter, but significantly higher than $226 million for the same period last year. The bank also expects lithium product sales volume to decline quarter-on-quarter in the third quarter, with a weaker product mix.

In addition, Albemarle’s Greenbushes CGP3 plant in Australia continues to face delays following a fire in June. The plant restarted operations on August 1, but JPMorgan expects it won’t return to full production capacity until the end of the first quarter in 2027.

From a longer-term perspective, Albemarle still benefits from strong demand for lithium driven by electric vehicle and energy storage system construction. The company’s technological investments are expected to help increase production efficiency and expand scale. However, its profitability remains highly dependent on the volatile price of lithium, and operational issues at key production bases may continue to disrupt earnings and profit margins.

JPMorgan believes Albemarle’s current stock price is close to its target price, and the valuation is at a reasonable level for a high-quality but highly volatile lithium producer.