Will Albemarle's share price rise to $156? One Wall Street analyst thinks so.

Since reaching its recent peak in November 2022, lithium prices have plunged by more than 80%. But the recent trough may have bottomed out, as the price of the metal, which is widely used in electric vehicle (EV) batteries, has risen about 10% so far this year.

This price performance prompted one Wall Street analyst this week to put theAlbemarle Corporation (New York Stock Exchange) Stock Code (ALB)'s stock rating was upgraded from "Hold" to "Buy".Bank of AmericaCertificates (Bank of AmericaAnalyst Matthew DeYoe at Securities also raised his price target for the lithium company to $156. The new price target implies that the company's stock price will rise more than 21% over the next 12 months or so from where it was before.

Demand for electric vehicles is the focus of the Albemarle industry

DeYoe's positive view of Albemarle stock is based on the continued rise in lithium prices. The sharp decline over the last 18 months is due to the fact that electric car manufacturers have started to cut prices. This has happened globally, from strong initial demand to the current decline.

It is not a stretch to correlate Albemarle's share price with commodity pricing. Since the price of lithium peaked in November 2022, Albemarle's share price has fallen by 50%.

Commodity pricing is ultimately determined by the balance between supply and demand. The initial surge in demand for electric vehicles led to an increase in demand for lithium batteries and a consequent increase in sourcing and refining capacity. The decline in the growth of electric vehicle sales led to an imbalance in the supply/demand balance.

But electric cars are still selling. Even with slower growth, the market is still there. Now, the lithium pricing pendulum may be swinging the other way. That's why Dew predicts the stock will rise more than 21%. This is a theoretical analysis of supply and demand.

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Will Albemarle Stock Go to $156?1 Wall Street Analyst Thinks So. was originally published by The Motley Fool.