Here's Why Albemarle Stock Surged Higher This Week
Key Points
Management's cost-cutting and refocusing on its core business is setting the company up for a dramatic increase in profits.
The lithium cycle is turning, supported by emerging investment in battery energy storage systems (BESS).
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Lithium materials company Albemarle (NYSE: ALB) received four analyst price target upgrades this week, ranging from $180 to $210. A cynic would argue that Wall Street is merely catching up with the stock's 125% price rise to around $188 as I write, but more to it than that. The company's fundamentals and end markets are improving, and the good news was enough to send the stock more than 16% higher this week.
Analyst upgrades
The analyst upgrades highlight many of the stock's key strengths. A combination of Albemarle's cost-cutting measures, a doubling in the price of lithium carbonate over the last year, and a growing energy storage market providing an increasingly strong pillar of growth in lithium demand means that Albemarle is ideally placed to dramatically increase profits in 2026.
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Indeed, the Wall Street analyst consensus calls for Albemarle's earnings per share to improve to $2.29 in 2026 from a loss of $0.84 in 2025. It would be a dramatic reversal of fortune, and it speaks to the classical cyclical conditions that lithium appears to be under right now. In other words, there was a boom in lithium demand coming from the traditional source (electric vehicle batteries) when automakers ramped up investment as they battled to establish a foothold in the EV market during the lockdown periods, only to rein in investment as EV sales didn't quite develop as expected.
Image source: Getty Images.
A growing source of lithium demand
That retraction caused a pronounced slump that only appears to be stabilizing now. In addition, automakers like Ford Motor Company and General Motors arestepping up investment in battery manufacturing for energy storage, even as Tesla continues to report strong growth in its energy generation and storage business – revenue up 44% in its third quarter on a year-over-year basis, and Albemarlre itself reported stronger than expected demand from energy storage in its third quarter.
Everything points to a strong recovery in 2026, and if that feeds through into higher lithium prices, analysts will have to upgrade Albemarle's earnings estimates again.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends General Motors. The Motley Fool has a disclosure policy.
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