The IGO Ltd (ASX: IGO) share price is among the best performers on the S&P/ASX 200 Index (ASX: XJO) on Thursday.
In afternoon trade, the battery materials focused mining company's shares are up 4% to $10.61.
This means the IGO share price is now up 58% since the start of the year.
Why is the IGO share price rising today?
The catalyst for the rise in the IGO share price today has been the release of a bullish broker note out of Citi.
According to the note, the broker has upgraded the company's shares to a buy rating from neutral with a price target of $12.40.
Based on the current IGO share price, this implies potential upside of just under 17% for investors over the next 12 months.
In addition, the broker is forecasting a 31 cents per share fully franked dividend in FY 2022. Including this dividend, the total return on offer stretches to approximately 20%.
Why did Citi upgrade its shares?
Citi has been looking at the resources sector. And while it suspects that the sector's strong performance could soften slightly after several strong quarters, it remains very positive on the IGO share price.
This is due to its belief that the company has a stronger earnings profile now thanks largely to its well-timed move into the lithium market through its Greenbushes and Kwinana operations in Western Australia.
Citi also highlights IGO's strong balance sheet with almost $1 billion of cash sitting on it. This could be used for potential acquisitions, such as nickel producer Western Areas Ltd (ASX: WSA), which it is currently in discussions with about a potential change of control transaction.
All in all, the broker is very positive on the company's outlook and sees a lot of value in its shares at the current level.
