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On Thursday, BMO Capital Markets adjusted its financial outlook for Sociedad Quimica y Minera (NYSE: SQM), a leading global lithium producer. Analysts at the firm lowered the price target on SQM shares to $45.00, down from the previous $55.00, while reaffirming an Outperform rating on the company’s stock. The stock, currently trading at $31.49, sits near its 52-week low of $31.18, significantly below its high of $48.90. According to InvestingPro data, analyst targets for SQM range from $36.50 to $78.00, suggesting potential upside despite recent challenges.
The revision of the price target was attributed to a recalibration of earnings estimates for 2025 and 2026. This adjustment reflects expectations of lower lithium prices and higher iodine costs than initially projected. Despite the reduction in the price target, BMO Capital Markets continues to see a favorable risk/reward balance for SQM. The new target is based on a valuation multiple of approximately 10 times the company’s projected 2025 enterprise value to EBITDA, which the firm considers a "trough" multiple, and only about 5 times the projected 2027 enterprise value to EBITDA, assuming lithium prices rebound to around $15,000 per tonne. Based on comprehensive analysis from InvestingPro, which offers exclusive access to detailed financial metrics and expert insights for over 1,400 stocks, SQM currently appears undervalued relative to its Fair Value.
In their commentary, BMO Capital Markets analysts expressed confidence in SQM’s position within the industry, particularly regarding its lithium expansion plans. According to the analysts, SQM’s management remains optimistic, believing that the current low prices have caused many assets to be underwater and that SQM, as one of the better-positioned players, is poised to benefit significantly as the market recovers.
The firm’s analysis suggests that SQM is undeterred by the current market conditions and is continuing with its strategies for growth. The company’s leadership is convinced that SQM will be one of the main beneficiaries when lithium prices eventually recover, given its strong position and expansion initiatives in the lithium sector.
In other recent news, Sociedad Quimica y Minera de Chile S.A. (SQM) reported its first quarter 2025 earnings, which fell short of analyst expectations, although revenue slightly exceeded estimates. The company posted adjusted earnings per share of $0.48, missing the analyst consensus of $0.61 by $0.13, while revenue reached $1.04 billion, surpassing the projected $1.02 billion. Despite the earnings miss, SQM reported record first-quarter lithium sales volumes, up approximately 27% year-over-year, driven by strong demand from electric vehicles and energy storage systems. However, CEO Ricardo Ramos noted recent declines in lithium prices due to oversupply, expecting lower realized prices in the second quarter of 2025.
The iodine business showed strong performance with steady market growth and elevated prices due to limited global supply, and SQM anticipates stable iodine sales volumes with high prices. Analyst Alejandro Demichelis from Jefferies adjusted SQM’s price target to $51.00 from $55.00, maintaining a Buy rating, citing a softer near-term outlook for the lithium segment but highlighting the company’s strong iodine division. The adjustment reflects a roughly 6% decrease in the estimated EBITDA for 2025-26. Additionally, SQM is progressing with the Coldelco agreement and expanding its production capacity, with the Mount Holland refinery plant expected to deliver its first product soon. Investors are closely watching SQM’s ability to navigate the changing dynamics within the lithium market and capitalize on its iodine division’s performance.
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