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Investing.com -- UBS downgraded Albemarle (NYSE:ALB) Corp to Sell from Neutral, saying that lithium markets are likely to remain oversupplied through 2026, weighing on prices and putting earnings expectations at risk.
The brokerage slashed its price target to $57 from $64, saying spot lithium prices, currently under $9/kg, are unlikely to recover meaningfully in the next two years, which would leave Albemarle’s 2026 EBITDA around 14% below consensus estimates.
UBS estimates consensus is effectively pricing in lithium at $17–18/kg, a level it sees as unrealistic in the medium term.
“We think estimates need to rebase lower,” the analysts wrote, adding that the stock remains vulnerable despite efforts to cut capital spending and stabilize free cash flow.
While Albemarle has reduced 2025 capex by nearly $1 billion, UBS said incremental lithium volumes are increasingly tied to spot pricing, dragging down margin mix.
It also warned that contract pricing, which currently provides some downside protection, could reset lower over the next 1–2 years.
The firm expects lithium spot prices to remain below $10/kg through 2026, citing persistent oversupply and a flattened cost curve, with even marginal producers in China and Africa able to operate profitably at current price levels.
UBS also flagged potential risks to Albemarle’s dividend in a prolonged downturn, saying free cash flow yield could hover near 3%, unattractive for long-term investors.
Shares of Albemarle have rebounded in recent weeks along with other lithium names, but UBS argued the bounce may be premature.
“We expect some investors will want to buy the dip, but we think estimates need to rebase lower and expectations will decline in a lower for longer scenario,” it said.
“We see more downside risk to shares medium term.”