Liontown Resources Ltd (ASX: LTR) shares could be in the buy zone right now.
That's the view of analysts at Bell Potter, who have reiterated their buy rating on this ASX lithium share this morning.
What is Bell Potter saying about Liontown shares?
According to the note, the broker has responded positively to news that Liontown is pushing ahead with its direct shipping ore (DSO) plans at the Kathleen Valley (KV) Lithium Project.
DSO is lithium-rich spodumene ore in an unprocessed form. It can be exported in this form while miners prepare for full production activities.
Bell Potter believes that these activities could be lucrative for Liontown. It said:
While DSO markets can be volatile, we expect LTR's product will find a buyer given the volume available and its supply jurisdiction. We estimate at current prices (SC6 ~US$3,500/t), DSO could generate cash of +$100m (not yet in our model), with upside leverage should index prices improve. LTR is in advanced discussion with potential DSO customers who have received bulk samples; we expect offtake will be signed in the coming months.
For now, the broker has retained its speculative buy rating and $3.30 price target on Liontown's shares. Though, this could change once the revenue is factored into the broker's model.
Nevertheless, its current price target still implies a sizeable upside potential of 20% for investors from current levels. Not bad given how its shares are already up 95% over the last 12 months.
The broker concludes:
LTR is now within 12 months of production and cash flows. Recent corporate approaches have highlighted the quality of KV and the scarcity of near term growth opportunities in the sector. LTR has the backing of major downstream EV OEMs. ESG is at the forefront of the company's development strategy.
