Lithium prices are once again feeling the chill, as JP Morgan lowers its profit forecast for Albemarle (ALB.US) and cuts the target price to $140.

Due to the continuous decline in lithium prices, JPMorgan Chase has significantly lowered its earnings forecast and target price for American lithium giant Albemarle (ALB.US). As a result, Albemarle's stock price fell by 5.89% on Tuesday, making it one of the worst performers in the S&P 500 index for the day. JPMorgan analyst Jeffrey Zekauskas maintained a "Neutral" rating on Albemarle but reduced the stock's target price from $160 to $140. The bank stated that it has revised down its adjusted EBITDA expectations for Albemarle from $3.37 billion in 2026 to $2.88 billion, a decrease of 14.4%; and the 2027 adjusted EBITDA forecast from $3.59 billion to $2.93 billion, a reduction of 18.4%. The expectations for adjusted earnings per share have also been lowered accordingly. The forecast for adjusted earnings per share in 2026 has been reduced from $14.20 to $12.05; the 2027 forecast has been lowered from $15.35 to $11.65. The bank pointed out that these adjustments primarily reflect a weakening outlook for lithium prices. Data shows that the average price of lithium carbonate in China was $24,810 per ton in the second quarter, but the average for the third quarter so far has fallen to about $21,625. JPMorgan now expects lithium prices to remain in a low range just above $20 per kilogram, whereas previous models assumed mid-range levels of $20 per kilogram. JPMorgan believes that the sensitivity of Albemarle's earnings to changes in lithium prices is extremely high. The bank estimates that for every $1 change in lithium prices per kilogram, Albemarle's annual EBITDA will correspondingly change by about $250 million. This suggests that the assumption change from the mid-range of $20 per kilogram to just above $20 is sufficient to explain the downward adjustment of its long-term EBITDA forecast by billions of dollars. JPMorgan also expects Albemarles adjusted EBITDA for the third quarter to be $668 million, down from $858 million in the second quarter but significantly higher than $226 million in the same period last year. The bank also anticipates a quarter-on-quarter decline in lithium product sales and a weakening in product structure for the third quarter. Additionally, Albemarle's Greenbushes CGP3 plant in Australia is still facing delays after a fire in June. The plant restarted on August 1, but JPMorgan expects it will not return to full production capacity until the end of the first quarter of 2027. From a longer-term perspective, Albemarle continues to benefit from strong lithium demand driven by the construction of electric vehicles and energy storage systems. The company's investments in technology are expected to help improve its lithium production efficiency and scale. However, its profitability remains highly dependent on the volatile lithium prices, and operational issues at key production bases may continue to disrupt earnings and profit margins. JPMorgan believes that Albemarle's current stock price is close to its target price, with valuations at a reasonable level for a high-quality but volatile lithium producer.