Albemarle Stock Has Been on a Hot Run. Wall Street Doesn’t See the Rally Lasting.

Shares of lithium miners Albemarle and SQM were both up roughly 25% in August. (John Moore/Getty Images)

The outlook for lithium miners isn’t what it once was. But shares of lithium miners have been on fire lately. Wall Street isn’t convinced the rally will last.

Coming into Thursday trading, shares of lithium miners Albemarle and SQM were both up roughly 25% in August. There isn’t any mystery why: Chinese electric-vehicle battery maker Contemporary Amperex Technology Co. Ltd, better known as CATL, idled a large lithium mine, helping restore supply and demand balance to the industry.

Benchmark prices for lithium, a key component in EV batteries, have risen to $11,000 per metric ton from about $8,400 per metric ton. (Prices are still off from 2022 peaks of more than $80,000 per metric ton, when lithium miners were struggling to keep up with growing demand for EVs.)

“We had originally viewed many of these [capacity curtailment] announcements as temporary and due to one-offs, but we also recognize a growing expectation of lasting curtailments given continued increases in lithium price,” wrote Baird analyst Ben Kallo on Friday. “We still have limited visibility in market dynamics and government policy within China, but we are raising our [Albemarle] price target to reflect the pricing move.”

His new price for Albemarle shares is $68, up from $58, but he still rates the stock Sell.

Albemarle stock traded as high as $87.08 early Friday after the target boost, but gave up some gains—leaving shares at $84.93, up just a penny on the day. The S&P 500 and Dow Jones Industrial Average fell 0.6% and 0.2%, respectively.

Albemarle stock finds itself in an odd spot. Things are better, the stock is up, but Wall Street isn’t sure what happens next. The average analyst price target for Albemarle stock has risen $5 in recent weeks, to $80, which is still about $5 below recent levels.

Overall, just 30% of analysts covering the stock rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.

Albemarle stock peaked at $334.55 in Nov. 2022.

At recent levels, Albemarle stock trades for about 12.5 times estimated 2026 earnings before interest, taxes, depreciation, and amortization, or Ebitda. Over the past five years, shares have ranged between about six and 30 times next year’s estimated Ebitda.

That range doesn’t give investors much help in projecting valuations in the coming years.

Write to Al Root at allen.root@dowjones.com