Why Albemarle Stock Just Got Upgraded

Albemarle stock was up 49% year to date and up 15% over the past 12 months coming into Tuesday trading. (Photo by John Moore/Getty Images)

Key Points

• Baird analyst Ben Kallo upgraded Albemarle stock to Hold from Sell, raising the price target to $113 from $81 a share.
• The upgrade is driven by strengthening end markets for lithium-ion batteries in storage applications, despite sluggish EV demand outside China.
• Albemarle shares were up 133% over the past six months, with lithium prices rebounding to $13,000 per metric ton from a July low of $8,500.

It has been tough for lithium producers like Albemarle over the past few years. Electric-vehicle sales, which use a lot of lithium in their battery packs, haven’t grown as fast as once expected.

Now there is another source of growth demand for lithium-ion batteries, and that is enough to drive one analyst to upgrade shares.

On Tuesday, Baird analyst Ben Kallo upgraded Albemarle stock to Hold from Sell and took his price target to $113 from $81 a share.

“While demand remains sluggish for EVs outside of China, lithium peers across multiple steps in the supply chain have cited strengthening end markets related to storage applications,” wrote Kallo. “Storage will play a meaningful role in (1) grid stability, (2) retail electricity affordability, and (3) smoothing [electricity] consumption from renewable sources, namely solar.”

It wasn’t an upgrade to Buy, so it didn’t help shares much. Albemarle stock rose early, but closed at $128.14, down 0.2%, while the S&P 500 and Dow Jones Industrial Average gained 0.3% and 0.4%, respectivel y.

Coming into Tuesday trading, Albemarle shares were up 49% year to date and up 15% over the past 12 months. Shares peaked north of $325 in late 2022.

Back then, benchmark lithium was $85,000 per metric ton. The material was in short supply as EV sales ramped higher. Tesla sales volume jumped 40% in 2022 to 1.3 million cars.

As is often the case with commodities, however, high prices led to more supply. Global production from lithium mines amounted to about 240,000 metric tons in 2024, according to the U.S. Geological Survey. That number was less than 80,000 tons in 2019. Lithium prices bottomed out in July at about $8,500 per metric ton, but they have bounced lately, trading closer to $13,000 per metric ton.

That has helped shares. Coming into Tuesday trading, Albemarle stock was up 133% over the past six months.

Investors, hoping higher prices are a sign of better days ahead, have bid up Albemarle shares. But higher lithium prices haven’t helped Wall Street sentiment yet.

Overall, 33% of analysts covering Albemarle stock rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. An upgrade to Hold doesn’t change the Buy-rating ratio. It changes the Sell ratio. About 15% of analysts covering Albemarle stock rate shares Sell. The average Sell-rating ratio for S&P 500 stocks is closer to 7%.

The average analyst price target for Albemarle stock is about $106 a share. The recent rally has taken Albemarle stock past analysts’ targets.

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