Bank of America upgraded Albemarle to Buy from Neutral and raised its price target to $190, citing a mix of stronger lithium market pricing and company-driven cost reductions that underpin a more favorable earnings trajectory.
The bank noted that lithium spot prices have roughly doubled since October and remain above $20 per kilogram. While it suggested that earlier share gains driven by headline momentum have likely faded, BofA sees the recent price support as moving toward a more structural footing.
After about a 14% pullback from recent peaks, BofA described the recent weakness in Albemarle shares as creating a more attractive entry point for investors. The upgrade follows fourth-quarter results that surpassed both guidance and market expectations, a performance BofA attributes in part to stronger energy storage volumes as customer destocking eased.
Management disclosed ongoing cost initiatives that are already delivering roughly $450 million in annualized savings, with an additional $100 million to $150 million of productivity improvements expected. Using current pricing assumptions, Albemarle is guiding to full-year EBITDA of $2.4 billion to $2.6 billion, a range that is substantially higher than consensus near $1.7 billion and modestly above BofA's prior forecast.
BofA described market fundamentals as tightening. On the supply side, changes to Chinese permitting are keeping higher-cost lepidolite production offline for a longer period. On the demand side, increased battery installations are supporting greater lithium consumption. The bank expects pricing to stay constructive through the year, albeit with volatility, and said prevailing price levels support profitable output across most of Albemarle's existing and planned assets.
Reflecting these dynamics, Bank of America raised its 2026 EBITDA estimate to about $2.43 billion from $2.31 billion, driven by higher pricing assumptions and the incremental cost savings. BofA also projects margin expansion to 41% from 36%, attributing the improvement to manufacturing efficiencies and supply-chain gains that help offset costs related to the Kemerton site and weaker performance at Ketjen.
Key takeaways
- Upgrade to Buy and price target increase to $190 based on firmer lithium prices and cost savings.
- Full-year EBITDA guidance of $2.4 billion to $2.6 billion compares to consensus near $1.7 billion.
- Market tightness driven by lower lepidolite supply and rising battery installations; pricing expected to remain constructive but volatile.
Analysis note - The outlook combines commodity-driven upside with company-executed efficiency gains, producing higher EBITDA and margin expectations in BofA's updated model.