Sociedad Quimica y Minera (SQM)

Apr 11, 2024Trade Ideas

With a yield of 9.87%, Sociedad Quimica y Minera (SQM) is a top lithium stock to watch.

Helping, analysts at Jefferies see SQM as an attractively valued play, upgrading it to a buy rating. The firm also raised its price target on the lithium stock by $10 to $62.80. “Whilst we remain cautious on lithium prices, we see attractive value emerging in SQM given the reshaping that the company is undergoing,” they said, as quoted by CNBC. The firm also noted that, “the market underappreciates SQM’s low-cash cost advantage in the lithium space.”

In addition, some analysts say lithium prices may be bottoming out.

According to Bank of America, for example, “2023 marked a huge drop in lithium prices, as the market flipped from the 2022 deficit into surplus. Inventory levels in China for lithium carbonate were elevated in February, but started to trend down in March [and pricing] started to show some strength. While EV sales growth has slowed, it is still 20% for the next few years, and thus we expect the global lithium market to tighten near-term,” as quoted by Barron’s.

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