Up 125% in 2023, would I be mad to buy Liontown shares at today's prices?

Have would-be investors missed the Liontown boat?

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Key points

  • The Liontown share price has rocketed 125% since the start of 2023 to trade at $2.77
  • Experts are divided over whether the stock will keep on soaring in the wake of Albemarle's takeover offer
  • One broker is tipping a 21% upside while another is forecasting the stock to plunge 46% 

The Liontown Resources Ltd (ASX: LTR) share price has been a standout performer so far this year, surging 125% since the start of 2023.

No doubt, investors will be happy with their stock's performance. But is it safe to say those not yet on board the company have missed out?

Right now, Liontown shares are trading for $2.77 apiece.

Liontown share price soars 125% in 2023

Fans of S&P/ASX 200 Index (ASX: XJO) lithium shares will have watched the Liontown share price in awe in recent months. But most of its gains were triggered by a single event.

The company was the recipient of a $2.50 per share takeover bid put forward by lithium giant Albemarle in March. The offer, though rejected, saw the stock rocket 68.5% in a single session.

And it didn't stop there. It kept climbing to peak at $3.02 earlier this month.

But experts are torn on whether the stock will return to such highs or surpass them entirely. Indeed, many are downright bearish on Liontown shares.

What are experts saying about Liontown shares?

Where Liontown shares are heading from here is a contentious subject.

Indeed, three of 10 analysts covering Liontown believe it's a strong buy while the remainder think it's worth holding, according to CMC Markets.

Bell Potter is among those most hopeful, my Fool colleague James reported shortly after Albemarle's offer was announced. It had a speculative buy rating and a $3.35 price target on the stock, a potential 21% upside.

But some experts are more sceptical. Alto Capital's Tony Locantro is one, tipping the ASX 200 stock a sell this week, saying, as per The Bull:

Prior to the bid, the lithium sector was struggling with a falling price and major cost blowouts on new projects … Investors may want to consider cashing in some gains.

Meanwhile, Goldman Sachs forecasts Liontown shares to fall to $1.50, slapping the stock with a neutral rating. That marks a potential 46% downside.

All in all, whether I'd be mad to buy Liontown shares at their current level apparently depends on who I might ask.

When might the company realise cash flow?

Liontown is still a lithium developer. It's aiming to bring its Kathleen Valley Project into production in mid-2024. From that point, three off-take agreements will kick off.

LG Energy Solution and Tesla have each signed on to buy 100,000 dry metric tonnes (DMT) in the first year of production, extending that to 150,000 DMTs in each of the subsequent four years. Meanwhile, Ford has agreed to buy 75,000 DMTs in the first year of production, 125,000 DMTs the following year, and 150,000 DMTs annually for another three years.

Each of the agreements will see the lithium product's value based on market prices.

Thus, the company could be bringing in regular cash flow before the market knows it, if all goes to plan.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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