A Look at SQM (NYSE:SQM) Valuation After Q2 Results Highlight Lithium Weakness and Iodine Strength

Sociedad Química y Minera de Chile (NYSE:SQM) just unveiled its Q2 2025 results, and there’s plenty for investors to digest. The most eye-catching development has to be the sharp decline in consolidated revenue, down 19%, driven primarily by a steep drop in lithium prices compared to last year. While it’s easy to focus on that setback, it’s worth noting that SQM’s iodine operations put in a strong showing, delivering impressive margins and revenue growth that helped cushion the blow. Looking at the bigger picture, the company’s share price has rebounded strongly over the past three months, gaining more than 33%, and is up over 31% for the year. This momentum stands in contrast to its disappointing three-year return. This latest earnings report follows a period of volatility, with lithium markets remaining under pressure but investor confidence visibly picking up as other segments of the business show resilience. With the stock’s recent surge, it’s fair to ask whether SQM has turned the corner and become a bargain buy amid challenging conditions, or if the market is already factoring in expectations of a lithium recovery and improving future profits.

Most Popular Narrative: 10.3% Undervalued

According to the most widely followed narrative, Sociedad Química y Minera de Chile (SQM) is considered undervalued, with its fair value set above the current market price. This perspective ties the company’s future upside closely to expected growth drivers and strategic resilience.

Expansion of lithium and specialty chemical production capacity positions the company for sustained revenue and margin growth. This is further supported by strong demand and tight global supply. Operational efficiency, diverse product streams, and rising barriers to entry protect the company's competitive strength and earnings resilience in the face of market volatility.

Curious how analysts project SQM’s fair value? It’s not just about rising demand. There is a specific set of bold growth projections and margin improvements included in this valuation. These numbers could surprise even seasoned investors. Want the full breakdown behind the headline figure? The most popular narrative spells out the key quantitative assumptions powering that optimistic target.

Result: Fair Value of $50.72 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, risks remain, especially if lithium prices stagnate or if regulatory hurdles in Chile delay expansion plans and disrupt long-term growth expectations.

Find out about the key risks to this Sociedad Química y Minera de Chile narrative.

Another View: Market Peers Send a Different Signal

A look at where shares trade compared to similar companies paints a less optimistic picture. By this method, SQM actually appears more expensive than the industry average. Could the recovery already be fully priced in?

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding Sociedad Química y Minera de Chile to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Sociedad Química y Minera de Chile Narrative

If you see things differently or want to dig into the details yourself, you can shape your own take on SQM in just a few minutes. Do it your way.

A great starting point for your Sociedad Química y Minera de Chile research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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