The Core Lithium Ltd (ASX: CXO) share price has started 2023 in a positive fashion.
As you can see below, the lithium developer's shares have rebounded strongly from significant weakness in December.
This leaves Core Lithium's shares trading almost 17% higher year to date at $1.19.
Image source: Getty Images
Where next for the Core Lithium share price?
Unfortunately, the team at Goldman Sachs believes the company's shares are heading lower again from here.
According to a note from this morning, the broker has reiterated its sell rating and 95 cents price target.
Based on the current Core Lithium share price, this suggests that the ASX 200 lithium share could tumble 20% over the next 12 months.
What did the broker say?
The main reason for Goldman's bearish sentiment is the company's valuation. The broker explained:
CXO looks relatively expensive vs. peers trading at 1.4x NAV (peer average ~1.0x; on GSe LT US$1,000/t spodumene), pricing in ~US$2,050/t (peer average ~US$1,100/t) or implying current pricing persists for ~1.5 years (peer average <1 year), while also having the lowest average operating FCF/t LCE — essentially embedding significant resource upside and capacity expansion/life extension ahead of fundamentals, in our view.
Goldman also believes production risks are not appreciated by the market. It adds:
We see production risk as the Finniss project moves through ramp up on project complexity (moving between different open pits and underground configurations), and the required exploration/resource upside to support capacity expansion/life extension currently priced into the stock looks significant.
Overall, the broker feels investors should be skipping Core Lithium and buying rival Allkem Ltd (ASX: AKE) right now. As covered here, Goldman Sachs has a buy rating and $15.20 price target on the latter.
