Analyst Note| Seth Goldstein, CFA |
Sociedad Quimica y Minera de Chile reported solid second-quarter results. Adjusted EBITDA rose 34% year on year, driven by higher lithium, iodine, and fertilizer volumes. Lithium prices were roughly flat year on year but up sequentially as SQM's shorter-term contracts versus its lithium peers allow the company to benefit more quickly from rising prices. This was in line with our full-year outlook that SQM would see sequentially rising prices each quarter. Having updated our model to incorporate the second-quarter results, we maintain our fair value estimate of $60 per share. Our narrow moat rating is also unchanged. At current prices, we view SQM shares as undervalued, trading in 4-star territory.