Albemarle Earnings: Shares Rally on Lithium Price Outlook

Key Morningstar Metrics for Albemarle

• Fair Value Estimate
  : $200.00
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : Narrow
• Morningstar Uncertainty Rating
  : Very High

What We Thought of Albemarle’s Earnings

Albemarle ALB reported strong second-quarter results, as higher lithium prices drove more than 150% year-over-year profit growth.

Why it matters: Shares were up 8% on Aug. 6 at the time of writing as the market reacted to the second-quarter results. Management does not guide to profits, so the market tends to use the most recent results and lithium spot and futures prices as directional indicators of profits.

• The huge profit increase is in line with our view that Albemarle’s low-cost lithium operations, which underpin our narrow-moat rating, will allow the company to generate strong profits and positive free cash flow.
• Albemarle should benefit from rising long-term lithium demand from growing global electric vehicle sales and the buildout of utility-scale batteries for energy storage. We view low-cost lithium producers as “picks and shovels” winners of the EV and ESS growth.

The bottom line: We maintain our $200 fair value estimate for narrow-moat Albemarle. We forecast Albemarle will continue to generate strong profits in 2026 and beyond, buoyed by lithium prices around midcycle levels.

• Lithium spot prices have fluctuated but averaged $20,000 per metric ton so far in 2026. This is in line with our long-term forecast based on the marginal cost of production. At this level, Albemarle’s low-cost lithium operations should continue to generate current profits.
• We view Albemarle shares as significantly undervalued, trading around 40% below our fair value estimate. We think the market is worried CATL’s lithium mine restarts will drive oversupply and lower prices. But we see growing demand keeping the market in balance.