Can SQM sustain its Q4 earnings momentum into next year?

**Sociedad Quimica y Minera de Chile (SQM) faces challenges in sustaining its Q4 earnings momentum into next year**, primarily due to the following factors: 1. **Tax Dispute Impact**: SQM's Q4 2024 net income was significantly impacted by a one-time charge related to a tax dispute. The resolution of this dispute and its future implications on earnings are uncertain. 2. **Lithium Price Trends**: While SQM experienced a record lithium sales volume in 2024, with nearly 205,000 metric tonnes sold, there was a decline in lithium prices quarter over quarter in 2024. The company's financial performance is closely tied to lithium prices, and sustained growth in this sector will depend on maintaining or increasing prices. 3. **Investment and Capital Requirements**: SQM plans to invest over USD 1.6 billion in 2024 and aims for USD 750 million in lithium capacity expansion in 2025. These investments could strain the company's financial resources and may lead to a funding gap for capital requirements due to current lithium prices. 4. **Market Volatility and Challenges**: The global chemical industry, in which SQM operates, is subject to market volatility, geopolitical tensions, and supply chain disruptions. These factors can significantly impact SQM's earnings and operational efficiency. 5. **Analyst Expectations**: Analysts have lowered price targets for SQM, indicating a cautious outlook. The average one-year price target stands at $45.67, suggesting a potential upside of 19.74% from the company's previous close. This suggests that while there is potential for growth, it may not be evenly sustained. 6. **Dividend Outlook**: SQM has a history of dividend payments, with an annualized dividend amounting to $2.05 per share. The company's commitment to dividends can be a positive sign for investors looking for stable returns. In conclusion, while SQM has a strong financial position and ambitious growth plans, particularly in the lithium sector, the company faces significant challenges in sustaining its Q4 earnings momentum. The outcome will depend on lithium price stability, the resolution of the tax dispute, and the company's ability to manage its investments and capital requirements effectively.