Albemarle (ALB) stock surged 7.5% on Wednesday, topping the S&P 500 after UBS highlighted that prolonged supply issues in China could hit as much as 15% of global lithium production. The prospect of tighter supply and higher prices has put ALB back in Wall Street’s spotlight.
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Albemarle, a global lithium producer with projects in the U.S., Chile, and Australia, has struggled with an oversupply in the market, mainly from China. A potential rise in lithium prices could continue to ease pressure on Albemarle, boosting investor confidence and providing the company with much-needed momentum ahead.
UBS Upgrades ALB Stock to Hold
Following the analysis, UBS analyst Joshua Spector upgraded Albemarle to Hold from Sell, raising his price target to $89 from $62. Spector noted that China’s supply cuts challenge his earlier “lower-for-longer” view on lithium prices. He now expects lithium prices to rise more than 20% year-over-year in 2026. In the near term, prices could move higher than previously expected, which makes Albemarle’s risk/reward outlook look more balanced, with a tilt to the upside.
Digging deeper, Spector estimates that by 2026, about 100,000 metric tons of lithium supply could be lost due to shutdowns or reduced output at around 10 sites in China. While some new supply may come from elsewhere, this would shift the market from being oversupplied (his earlier forecast of ~6% surplus) to closer to balanced.
Consequently, Spector now expects Albemarle to generate $200 million–$300 million in free cash flow annually before dividends. This marks a sharp improvement from his earlier outlook, which was closer to breakeven or negative after dividend payments.
Is ALB a Good Stock to Buy?
On TipRanks, ALB stock has a Hold consensus rating based on six Buys, 12 Holds, and two Sells assigned in the last three months. Also, the average Albemarle stock price target of $80.53 implies a downside of over 8% from current levels.
