On Thursday, Deutsche Bank reaffirmed a Hold rating on shares of Sociedad Quimica y Minera (NYSE:SQM), with a steady price target of $52.00. The decision came after the company's reported adjusted EBITDA of $428 million, which fell short of market expectations by 15%.
The discrepancy was primarily attributed to the Lithium segment's performance, where despite a 19% increase in volumes, the impact was negated by a 22% drop in pricing to $15.4 per kilogram, which was close to the spot market rates observed over the past three to four months.
The analyst at Deutsche Bank pointed out that the pricing level was a significant point of interest for investors, especially during the company's conference call.
The market had anticipated a larger difference between the realized price and the spot market rates. In addition, Sociedad Quimica y Minera indicated that it expects pricing in 2024 to remain relatively stable, likely in reference to the fourth quarter realized pricing.
The report suggests that SQM's stock is likely to experience a downturn following the announcement of these results. The predicted decline is due to a combination of factors: the weaker than expected adjusted EBITDA, the lower Lithium pricing realization, and the company's anticipation of average prices in 2024 mirroring the current level. Furthermore, the company's lack of EBITDA guidance for the future, which although is typical for SQM, may also contribute to the negative investor sentiment.
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