It has been a very disappointing month for the Core Lithium Ltd (ASX: CXO) share price.
Since the start of February, and with one session left, the lithium miner's shares have lost 20% of their value.
This follows concerns over falling spot lithium prices and the impact this could have on its profits in the coming years.
Where next for the Core Lithium share price?
Unfortunately, despite the significant pullback in February, one leading broker isn't recommending investors jump in just yet.
According to a note out of Goldman Sachs, its analysts have reiterated their sell rating and cut their price target on its shares to 90 cents.
This suggests further potential downside of 3.2% for investors from current levels.
And while this downside isn't overly significant, it is worth noting that many of the other ASX lithium shares under its coverage trade well below their price targets. So, there's potential for Core Lithium share price to drop into the 70s to 80s based on this.
What did the broker say?
Goldman Sachs continues to believe that lithium prices are on the verge of collapsing. This view is supported by a recent visit to China. It commented:
We note the lithium chemicals spot and forward pricing has continued to decline, with our commodities team reiterating their expectation for lithium prices to decline from 2H23, supported by recent China trip feedback suggesting risk of higher than expected lithium supply, and the larger operating Australian spodumene projects either recently outperforming production expectations (and increasing near term production guidance) or lifting medium term production growth targets.
The broker has also downgraded its earnings estimates to reflect its belief that there will be no more direct shipping ore (DSO) sales. It concludes:
Our FY23 EPS is down c.12% on no longer expecting any further DSO sales as a result of current stockpiles being utilised for DMS commissioning and pit water limiting near term mining volumes, though partly offset by a moderate increase FY23 spodumene production following DMS construction completion. Our 12m PT is lowered to A$0.90/sh (from A$0.95/sh) on the lower near term earnings.
