SQM (NYSE:SQM) Valuation Check After Goldman Sachs Downgrade on Lithium Outlook and Capex Concerns

Sociedad Química y Minera de Chile (NYSE:SQM) just took a breather, slipping after Goldman Sachs cut its rating to Neutral. The firm cited softer lithium price expectations and heavier upcoming capex that could squeeze free cash flow.

See our latest analysis for Sociedad Química y Minera de Chile.

That downgrade taps the brakes on what had been strong momentum, with a roughly 23.9% 1 month share price return and about 67.8% year to date, even though the 3 year total shareholder return is still negative and longer term holders remain under water.

If you are reassessing SQM after this pullback, it could be a good moment to broaden your watchlist and explore fast growing stocks with high insider ownership.

With shares now hovering near Wall Street targets after a powerful rebound, the key question is whether SQM’s recent weakness has opened up genuine value, or if the market is already fully pricing in its next leg of growth?

Most Popular Narrative: 6.7% Overvalued

With Sociedad Química y Minera de Chile closing at $60.48 against a narrative fair value of $56.66, the spotlight shifts to the growth and margin bets embedded in that gap.

Analysts expect earnings to reach $1.9 billion (and earnings per share of $7.01) by about September 2028, up from $477.5 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $724 million.

Read the complete narrative.

Curious what kind of revenue surge and margin expansion could support that earnings jump, and why the future valuation multiple drops so sharply from today? Dive into the full narrative to see which bold assumptions are doing the heavy lifting.

Result: Fair Value of $56.66 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this hinges on resilient lithium pricing and smooth execution in Chile, where regulatory shifts or project delays could quickly challenge today’s upbeat assumptions.

Find out about the key risks to this Sociedad Química y Minera de Chile narrative.

Another View: DCF Points to Underpricing

While the popular narrative suggests SQM is about 6.7% overvalued, our DCF model tells a different story. Based on those long term cash flow assumptions, SQM appears roughly 10.8% undervalued at $60.48 compared with an intrinsic value near $67.77. Is sentiment too focused on near term lithium noise?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Sociedad Química y Minera de Chile for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 903 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Sociedad Química y Minera de Chile Narrative

If you see the story differently, or want to stress test the assumptions with your own inputs, you can build a fresh narrative in minutes, Do it your way.

A great starting point for your Sociedad Química y Minera de Chile research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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