Top broker says the Liontown share price can rise 150%

Liontown shares could rise 150% according to one top broker…

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Key points

  • Yesterday, Liontown Resources signed an offtake and funding agreement with Ford
  • This paved the way for its board to approve the development of the Kathleen Valley Lithium Project
  • One top broker sees significant value in the Liontown share price

The Liontown Resources Limited (ASX: LTR) share price has been a positive performer this week.

Since the end of last week, this ASX lithium developer’s shares have gained a sizeable 15%.

This compares favourably to a decent 1.9% gain by the ASX 200 index.

Can the Liontown share price keep rising?

The good news for investors is that one leading broker believes the Liontown share price can climb materially from current levels.

According to a note out of Bell Potter, its analysts have retained their speculative buy rating with a trimmed price target of $2.87.

Based on the current Liontown share price of $1.12, this implies potential upside of approximately 150% over the next 12 months.

What did the broker say?

Bell Potter notes that Liontown has signed an offtake agreement and also a funding agreement with auto giant Ford, which has paved the way for the company’s board to approve the development of the Kathleen Valley Lithium Project.

LTR has announced a Final Investment Decision (FID) for its flagship hard-rock lithium project in Western Australia’s northern goldfields, Kathleen Valley. The FID coincides with announcing a $300m debt finance facility with Ford Motor Company and a further 150ktpa spodumene (SC6) binding offtake agreement.

And while the capital cost of the project is expected to be higher than previously forecast, Bell Potter believes this increase is still a good outcome in the current environment.

Containing estimated capital cost escalation ($46m) to around 10% of the initial capital estimate is an excellent outcome in the current inflationary environment.

All in all, the broker feels that Liontown is now “in a strong strategic position in a market for lithium facing supply shortages.”

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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