The IGO Ltd (ASX: IGO) share price has been a positive performer over the last 12 months.
As you can see on the chart below, during this time, the ASX 200 lithium share has risen almost 11%.
This compares very favourably to the performance of the S&P/ASX 200 Index (ASX: XJO), which is down 0.5% over the same period.
Has this ASX 200 lithium share peaked?
The good news for investors is that the team at Goldman Sachs believes this ASX lithium share can still rise a bit further from here.
According to a note, the broker has responded to IGO's quarterly update by retaining its buy rating with an improved price target of $14.30.
As with most mining updates during the last quarter, its analysts were not blown away with the company's performance. They commented:
3Q23 spodumene production softened in line with GSe to 356kt down 6% QoQ driven by lower throughput attributed to a reduction in CGP1 and CGP2 run time during the quarter and mined grade fell slightly 2.59%, though remains above long run grade expectations of ~2% at Greenbushes. Sales revenue of A$2.8bn was up 23% QoQ representing higher spodumene contracted prices and favorable sales mix with high grade spodumene product. IGO expects higher spodumene sales volumes in the June quarter, following the 13% fall in shipments in the March quarter, where spodumene sales were 336kt for 3Q, 9% below GSe.
Despite this, the broker remains a fan of this ASX 200 lithium share and continues to recommend it as a buy. This is due to its attractive valuation compared to peers, its strong free cash flow generation, and the low costs of its key Greenbushes operation. It explains:
We rate IGO a Buy on: 1) Valuation: trading on ~1.0x NAV and pricing ~US$1,050/t spodumene (peer average ~1.3x NAV and ~US$1,300/t), and near-term FCF yields of c. 15-20% in FY23/24E and c. 10% in FY25/26E remain attractive vs. peers, 2) Greenbushes the lowest cost lithium asset in our coverage, 3) TLEA dividends de-risk nickel spend; Ni volumes declining, but study outcomes due this year.
