SQM Earnings: Profits Plunge on Lower Lithium Prices

SQM's third-quarter results reflected the decline in lithium prices as adjusted EBITDA fell 53% year over year driven by a realized lithium price decline of 47% versus the prior-year quarter. However, the quarter was in line with our outlook for the year, and we expect SQM's average realized lithium price to fall further in the fourth quarter. While we expect SQM's profits will see a near-term decline from lower lithium prices, we continue to see a strong long-term outlook for the low-cost lithium producer. Having updated our model to incorporate SQM's third-quarter results, we maintain our $95 per share fair value estimate and narrow moat rating.