According to Piper Sandler, Albemarle is a “lithium pure play” with strong earning power. Piper analyst Charles Nievert initiated research coverage of Albemarle with an overweight rating, saying investors are underestimating the miner’s earnings growth outlook. According to the Congressional Research Service, lithium is one of five important minerals needed in electric vehicle batteries. Piper bases its 12-month share price target of $310 on the likelihood that Albemarle should sell for 7.1x the bank’s 2024 EBITDA estimates of $5.5 billion — versus consensus EBITDA of $4 billion. “The multiple represents a substantial discount versus the historical multiple of 12.1x. We believe the discount may derive from mispricing of ALB earnings,” Nevart wrote Wednesday. “Based on the consensus 2024 EV/EBITDA multiple of 6.9x, the market applies to many more in general associated with cyclical stocks, and indicates not only peak earnings, but also a significantly lower trough in some time. However , we see a company transitioning from a cyclical to another growth deserving of a multiple commensurate with its historical performance,” Nievert said. Shares of Albemarle are outperforming the start of the year, up nearly 25% as of Wednesday’s close. Last year, the stock also outperformed the S&P 500, down 6.6% compared to the broad market’s nearly 19% decline. The analyst’s 12-month price target of $310 represents an upside of more than 14% from Wednesday’s closing price. Shares climbed more than 1% in premarket trading Thursday. Nievert expects strong lithium prices to continue to boost earnings as Albemarle expands its capacity — even if lithium pricing declines below 2022 levels. Albemarle is expanding capacity in China as well as in the US, Australia and Chile, which should add to its “extraordinary cash-generating potential.” “Despite the cooling, we still see significant earnings growth in 2023 as 1H23 earnings comps will be well above year-ago levels. We believe 2024 earnings will come in above 2023, driven by ongoing projects There is significant volume growth to come, which may more than offset the price decline,” read the note. —Michael Bloom of CNBC contributed to this report.