The Lake Resources N.L. (ASX: LKE) share price has had a difficult 12 months.
Since this time in 2022, the lithium developer's shares have lost approximately two-thirds of their value. This can be seen on the chart below.
Are Lake Resources shares good value?
While it certainly is a high-risk option for investors, one leading broker continues to see plenty of value on offer with its shares.
A note out of Bell Potter earlier this month, reveals that its analysts have retained their speculative buy rating and $2.52 price target on the company's shares.
Based on the latest Lake Resources share price of 53 cents, this implies massive potential upside of 375% for investors over the next 12 months.
What did the broker say?
Firstly, let's take a look at what Bell Potter has been saying about lithium in general this month. It commented:
Several price reporting agencies have indicated an improvement in lithium prices over recent weeks, after declines of up to 75% from late 2022 peaks. Reports suggest China's curbing of electric vehicle subsidies in January 2023 caused elevated lithium inventory levels through the supply chain and significant price declines across the lithium complex. However, Benchmark Minerals' assessments of lithium carbonate prices in China's domestic market are now increasing as trader sentiment has improved. Fastmarkets have also reported positive price momentum in the Chinese domestic carbonate market, supporting an uplift in hydroxide prices.
Some analysts consider that recent improvements in electric vehicle demand will lead to tightening markets for battery minerals and that the trough in lithium prices is behind us. While other market watchers have questioned the prices lift, pointing to inventory restocking rather than a legitimate increase in order books. From our perspective, recent quarterly commentary from ASX listed lithium producers pointed to recent normalising of supply chain inventories and an expected strengthening of markets into 2H 2023.
That could be good news for the Lake Resources share price. Particularly given how the company will be looking to wrap up the financing of its Kachi project in Argentina soon.
As for why the broker is positive on this lithium share. It previously explained:
LKE's Kachi lithium project in Argentina is strategic in terms of scale, applied technology and uncommitted product offtake. Demonstrating the feasibility of ion exchange lithium extraction is key to de-risking the project; with success likely to disrupt traditional brine lithium production. The technology also brings significant ESG benefits including less land disturbance and water consumption.
