If you're a lithium bull looking for investment options in the industry, then it could be worth checking out the four ASX 200 shares listed below.
That's because analysts at Morgans have named these lithium shares as buys this week.
What is the broker saying about ASX 200 lithium shares?
The good news is that Morgans believes that lithium prices will remain higher for longer due to tight supply conditions.
It expects this to be driven by a post-holiday recovery in the Chinese electric vehicle (EV) market and lithium project delays. It explained:
Spot prices have softened but remain above contract prices. The Chinese EV market, still the world's largest, has slowed recently for the Spring Festival but we expect activity to increase in the near future. Meanwhile, lithium projects are taking longer to complete leaving the market tight. Decreasing lithium production but increasing demand reflected in analyst consensus of key Chinese companies points to tightness continuing.
In light of this, the broker believes that Allkem Ltd (ASX: AKE), Mineral Resources Ltd (ASX: MIN), and Pilbara Minerals Ltd (ASX: PLS) shares are buys, with fellow ASX 200 lithium share Liontown Resources Ltd (ASX: LTR) a higher risk speculative buy.
Its ratings are as follows:
- Add rating and $15.20 price target on Allkem's shares.
- Add rating and $102.00 price target on Mineral Resources' shares.
- Add rating and $5.30 price target on Pilbara Minerals' shares.
- Speculative buy rating and $1.96 price target on Liontown's shares.
Commenting on its ratings, the broker said:
We continue to prefer AKE amongst the lithium pure plays as we see a longer growth runway for production and greater potential valuation upside. PLS is generating strong cash flows and holds opportunities for more tactical trades given speculation about potential uses of the growing cash balance.
MIN has been more resilient than peers and offers more diversified commodity exposures. The potential upside is less than other lithium large caps but it has also shown less volatility and stronger potential dividend yield. We retain our ADD rating. We initiate coverage of LTR (SPECULATIVE BUY) and CXO (HOLD). Both are near-term developers of Australian spodumene deposits. We see upside for LTR if it can resolve its funding issues and avoid further significant cost increases.
