Albemarle (NYSE:ALB) shares dropped more than 4% on Friday after UBS downgraded the company to Sell from Neutral, slashing its price target to $57 from $64, as the firm sees persistent oversupply in the lithium market weighing on the company's earnings through at least 2026.
Drawing on research from its global lithium team, UBS expects lithium prices to remain below $10/kg for the next two years—well under the $17–$18/kg mid-cycle levels that appear to be baked into Albemarle’s current valuation. While modest year-over-year gains in realized prices are still expected, UBS forecasts that lithium will stay in surplus for the foreseeable future, delaying any meaningful price recovery until later in the decade.
This bearish outlook translates into a 2026 EBITDA projection that is roughly 14% below consensus. UBS warns that the market is still pricing Albemarle shares based on overly optimistic assumptions, and that earnings expectations will likely need to reset lower in a “lower-for-longer” pricing scenario.
Despite potential investor interest in buying the dip, the firm sees more downside risk ahead, arguing that estimates need to be brought back in line with a more realistic view of the lithium supply-demand imbalance.
