Sociedad Quimica Y Minera SA, the Basic Materials sector company, was revisited by a Wall Street analyst yesterday. Analyst Isabella Simonato from Bank of America Securities reiterated a Sell rating on the stock and has a $36.50 price target.
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Isabella Simonato’s rating is based on several factors that suggest caution regarding Sociedad Quimica Y Minera SA’s stock. Despite a recent rally in SQM shares, which rose by 25% in line with lithium carbonate prices, the stock underperformed compared to global peers, which saw a 38% increase. This underperformance is partly attributed to uncertainties surrounding an agreement with Codelco and is consistent with historical valuation discounts relative to peers.
Furthermore, the recent rise in lithium prices appears to be driven more by market sentiment than by substantial changes in supply-demand dynamics. The global lithium market is expected to remain oversupplied until 2027, despite potential supply risks from China. Additionally, the ongoing political developments in Chile, particularly the presidential candidates’ opposition to the Codelco deal, add to the uncertainty. These factors, combined with a price objective of $36.50, which is below the current trading price, support the Sell rating.