November has been another volatile month for the S&P/ASX 200 Index (ASX: XJO) lithium share sector.
Some of the biggest lithium miners have seen double-digit declines in recent times.
The Pilbara Minerals Ltd (ASX: PLS) share price is down more than 16% since 9 November 2022.
Since 14 November 2022, the Allkem Ltd (ASX: AKE) share price has dropped by 17%.
IGO Ltd (ASX: IGO) shares have dropped around 8% since 14 November 2022.
However, it has been a positive run for the miner Mineral Resources Limited (ASX: MIN). The share price has risen 3.5% since 14 November 2022, perhaps thanks to the rising iron ore price.
Have we seen the peak for the ASX 200 lithium shares? One broker thinks that the future for these businesses is still compelling.
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UBS confident on the future
According to reporting by The Australian, the analyst Dim Ariyasinghe from UBS said the broker still has long-term conviction with the outlook for lithium. Its view "remains strong" despite "short-run jitters".
The expert reportedly noted "near-term risks" relating to electric vehicle demand because of increasing uncertainty and disruption caused by COVID-19 cases in China. There is an expected cut of Chinese electric vehicle subsidies, as well as slowing demand for electric vehicles from the European Union and China.
But, in promising commentary for lithium investors, the analyst said:
However, our view on the medium-term and long-term remains positive and has actually increased due to additional policy support for EVs.
Which ASX 200 lithium shares does the broker prefer?
While all of the businesses may have operations in the lithium sector, they have different valuations, different growth plans and different financials.
It was reported by the newspaper that of the four lithium miners in this article, two are rated as buys – Allkem and Mineral Resources.
Next, the broker is neutral-rated on IGO shares, remembering that only part of this business is related to lithium mining.
Finally, UBS has a sell rating on Pilbara Minerals shares. Keep in mind that the Pilbara Minerals share price has doubled over the past six months. The price target of $3.05 would represent a fall of around a third – but if the Pilbara Minerals share price dropped to $3 tomorrow it would still be up by 30% over the past six months.
