BofA follows GS downgrading lithium - SQM to sell on election

Dec. 20, 2021 10:58 AM ETSQM, ECHBy: SA News Team11 Comments

Brine pools for lithium carbonate mining.

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  • Bank of America out with a ratings cut on Sociedad Quimica y Minera de Chile (NYSE:SQM), taking the Company down to sell following last night's landslide victory for "far left" presidential candidate Boric.
  • Fears include higher taxes, interference in existing concessions, and the creation of a state-owned enterprise in charge of developing the lithium industry; all leading the analyst to reduce her EBITDA-valuation multiple from 14x to 8x 2022 earnings before interest, taxes, depreciation and amortization.
  • The analyst is 30% above consensus EBITDA estimates for fiscal year 2022, but feels the policy overhang will drive shares lower medium term, regardless of financial performance.
  • The market appears to agree with BofA, as the stock is off 14% this morning, with local index (BATS:ECH) down ~10%.
  • This follows a bearish lithium pricing note, and downgrades from Goldman just last week.

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