Goldman Sachs: lowers lithium stock earnings forecast by 5% to 42%, downgrades Ganfeng Lithium Group (01772) to "sell" rating.

Goldman Sachs released a research report stating that the fundamentals of the lithium market have improved significantly in recent months. It is expected that from the second half of 2025 to the first half of 2026, there will be a tight supply and demand situation, mainly due to strong domestic demand and exports. Energy storage systems are expected to be the driving factor for the most significant changes, while the reaction speed on the supply side has not noticeably accelerated. The rating for Ganfeng Lithium Group (01772) has been downgraded from "neutral" to "sell", with a Hong Kong stock target price raised from 28 Hong Kong dollars to 32 Hong Kong dollars. The "sell" rating for Ganfeng Lithium Group A shares (002460.SZ) and Tianqi Lithium Corporation (09696, 002466.SZ) is maintained, with the Hong Kong stock target price for Tianqi Lithium Corporation raised from 21.5 Hong Kong dollars to 24.5 Hong Kong dollars. However, the bank believes that there is a downside risk in current spot prices, including negative feedback from downstream markets in the short term, slowing growth in energy storage system installations, and other factors affecting inventory replenishment. The supply side is also slow in pace. Goldman Sachs updated its lithium price forecast, based on the Chinese benchmark lithium carbonate spot price, averaging $11,000 per ton of lithium carbonate material in the first half of 2026, unchanged from the previous forecast. The second half of 2026 is expected to average $9,500 per ton, a 14% decrease from the previous forecast. The forecast for 2027 is an average of $9,300 per ton, a 15% decrease from the previous forecast. Due to the adjustment in lithium price forecasts, the bank has lowered profit forecasts for covered lithium stocks by 5% to 42% for the years 2026 to 2027. However, due to a roll forward of valuation years to 2026 and assuming higher valuations at the cyclic bottom, the target price has been raised by 9% to 15%. The bank estimates that the stock prices of most Chinese lithium stocks currently imply a range of $16,200 to $24,500 per ton of lithium carbonate in 2026 to 2027.