EV Manufacturing & Demand Challenges May Weigh On Lithium Producers Albemarle & Livent's Growth Outlook: Analyst

Piper Sandler analyst Charles Neivert downgraded Albemarle Corp ALB and Livent Corp LTHM to Neutral from Overweight.

The analyst also lowered ALB's price target to $155 from $255 and LTHM's to $19 from $33. 

The re-rating reflects challenges in EV manufacturing and demand, which may lead to the degradation of lithium's supply-demand dynamics significantly, writes the analyst.

The analyst notes that 2030 EV sales estimates have been revised down to around 42 million from 48 million, which can push LCE demand down to 2,130 kt from 2,550 kt, respectively.

Neivert says lithium markets may face several challenges that will curb demand growth at the same time that lithium supply increases are going through a ramp-up in the coming 12 to 24 months.

The analyst sees vast downstream issues for the product due to weakening EV demand growth owing to macroeconomic factors and product issues within the OEMs. Consequently, the analyst expects lithium prices to remain under pressure and weigh on earnings growth.

For ALB, the analyst lowered the EPS estimate to $27.33 from $27.81 for FY23 and $17.56 from $21.78 for FY24.

Also Read: Albemarle Backs Out Of Acquisition Offer For Australia's Liontown Resources

For LTHM, the analyst reduced estimates for EPS to $1.87 from $2.01 for FY23 and $1.83 from $2.38 for FY24.

Price Action: ALB shares are trading lower by 1.63% at $136.97, and LTHM is down 1.35% at $15.69 on the last check Wednesday.