Levent (LTHM) And Albemarle (ALB) Only supercharged lithium stock. Livent upped the previous forecast and significantly raised year-round guidance on Tuesday evening. Industry giant Albemarle followed suit late Wednesday.
LTHM stock jumped on Wednesday market work, flashing buy signals and giving a big boost to other lithium stocks like Albermarle. ALB stock jumped Wednesday night, as other lithium shares continued to rally.
With the rising prices of electrical materials that are in short supply, MP . material (deputy) on tap late on Thursday. MP Materials, whose rare earth materials are used in permanent magnet motors, reported late Thursday.
With no new capacity available online this year, Livent said all the upside is coming from pricing. “With our price expectations for the remainder of 2022 remaining similar to today, Livent is significantly raising its full-year guidance ranges,” CEO Paul Greaves said on the earnings call.
Coin analyst David Dicklebaum upgraded LTHM stock to outperform the market, raising its target price to 33 from 25. He cited increased growth visibility and exposure of Livent contracts to higher market prices.
Livent has offered encouraging updates on several previously planned and unannounced expansions that are supposed to boost capacity starting in 2023. The company aims to triple production by 2030.
Estimates: Livent was expected to post earnings of 13 cents per share versus 2 cents last year, with revenue growing 53% to $140.15 million.
consequences: Living earnings per share rose 950% to 21 cents. Revenue jumped 56% to $143.5 million in the second consecutive quarter of accelerated growth.
prospects: Livent raised its full-year guidance range for EBITDA to $290-$350 million, up 78% at the midpoint from the previous range of $160-$200 million. Revenue should range from $755 million to $835 million, up 39% at the midpoint from the $540 million to $600 million range shown in mid-February.
LTHM stock actions
LTHM stock jumped 30% to 28.55 on Wednesday, breaking the 50-day and 200-day lines. Livent broke the downward sloping trend line from its all-time high at 33.04 on November 22nd and also moved above the short term high of April 5th at 28.32. Both displayed strong entries in the LTHM stock.
Lithium stocks also got a big boost from the Fed, like Federal Reserve Chairman Jerome Powell noted that policy makers Not actively considering 75 basis points for the June and July meetings.
Estimates: Analysts expected earnings per share to rise 49% to $1.64. Revenue grew 22.5% to $1.02 billion.
consequences: Albemarle’s earnings jumped 116 percent to $2.38 per share. Revenues ballooned 36% to $1.13 billion. Both were easily the best gains in years.
Outlook: The lithium-equity giant raised its forecast for 2022 “based on expectations of continued demand growth and tight markets it serves.” In other words, rising prices for lithium and bromine.
It raised its 2022 EPS target to $9.25-$12.25 from $5.65-$6.65 previously, well above the consensus. It forecast sales of $5.2 billion – $5.6 billion, well above expectations of $4.41 billion.
ALB stock jumped 17% overnight. This is after a 9.3% rise on Wednesday to 215.47, to regain the 50-day line, on Livent’s bullish forecast. ALB stock is set to jump above the 200-day line, break the trend line and clear key resistance around 248, providing several early entries.
MP Materials, after hitting a record high in late March, has given up a third of its value over the past month. On Wednesday, MP stock rose 2.7% to just above the 200-day line.
Why struggle lithium stocks
The bullish start to first-quarter earnings is a welcome change. ALB, LTHM and most other lithium stocks have all fallen this year. Sociedad Quimica y Minera de Chile (Square meters) is a notable exception, although this is partly due to the activity of the fertilizers.
Albemarle’s disappointing earnings guidance released on February 16 caused the biggest drop in lithium shares. Investors seemed impatient about rising costs, production restrictions and tight contracts at very low prices.
Albemarle said at the time that only 10% of its supply was being sold at Chinese spot market prices, which have risen nearly 500% over the past year. Albemarle said the pricing of 40 percent of its supply was fixed based on contracts reached before the lithium price hike in 2021.
Lithium futures prices
The better news on the decade front wouldn’t come as a surprise. If electric car producers aren’t afraid about the supply of lithium and other key EVs, they probably should be.
For example, Morgan Stanley’s Adam Jonas wrote in a March 21 note that he expects a shortage of battery material to limit Ford’s EV production to 500,000 vehicles in 2026, a quarter of the company’s official target. General Motors says it will have the capacity to build two million electric vehicles in 2025, half of which will be in North America and the other half in China. But Jonas sees 300,000 as realistic, not including her best-selling mini car in China.
Both automakers told analysts last week that they had shut down their much-needed lithium supply during the middle of the decade. However, it is possible that they are relying on new sources of lithium that are not yet proven to be scalable, such as the Salton Sea in California. Industry analysts are more cautious about the prospects for quickly overcoming technical challenges.
Graves told analysts that most automakers “plans for electric vehicles have been put in place without addressing the fundamental challenges of securing long-term supplies.”
“As a result, there has been a real rush to source batteries, and in parallel there is a growing realization that there is a fundamental shortage of available lithium on the market for at least the next two years.”
For the most part, lithium supply agreements were handled by the automakers’ partner battery companies. But that is changing, he said. Automakers are “more involved in battery material procurement talks, and are seeking to sign direct commitments with suppliers of battery material that will become more important to the market in the 2024 or 2025 time frame.”
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