JP Morgan recommends investing in SQM

Tuesday, February 27, 2018

According to a JP Morgan report published Tuesday, Chile's SQM is a favorite stock to gain exposure in the lithium market.

The announcement comes shortly after fellow US bank Morgan Stanley downgraded fertilizer producer SQM to "underweight" on Monday, provoking a 10% fall in the shares of the company.

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JP Morgan recommended its clients take advantage and buy cheaper SQM shares.

While Morgan Stanley forecasts a continuous fall in lithium prices through 2021 as more miners increase production, its rival kept price estimates at US$14,000/t for this year, stabilizing at US$10,000 in the long-term. This compares with the US$7,000 Morgan Stanley anticipates.

"With a better growth visibility after the exploration agreement with Corfo, SQM should be a competitive actor to fight for a future market share in an industry that still grows approximately 20% per year," said the report.