Liontown Resources Ltd (ASX: LTR) shares are having a good session.
In afternoon trade, the lithium developer's shares are up 4% to $1.52.
Why are Liontown shares roaring?
While most ASX lithium shares are rising today, Liontown shares are having a stronger day than most.
The catalyst for this may have been a broker note out of Goldman Sachs this morning.
According to the note, the broker has taken its sell rating off the company's shares and upgraded them to a neutral rating with a $1.55 price target.
This is the opposite of what it did with Core Lithium Ltd (ASX: CXO) shares, which have been downgraded from neutral to a sell rating.
Why did Goldman upgrade its shares?
Firstly, Goldman downgraded Core Lithium shares on the belief that the market has not factored in development risks. It suspects that a capital raising could be needed due to "recent underground cost escalations" and falling lithium prices.
However, for Liontown, the broker believes that all risks are now adequately priced in. It commented:
Conversely, we upgrade LTR to Neutral on valuation, with production risks now more priced in at 1.1x NAV (peers ~1.1x NAV) or pricing ~US$1,040/t LT spodumene (peer average ~US$1,080/t) with the share price falling 46% (since ALB withdrew their bid) or ~18% below the equity raise price.
However, the broker doesn't see enough value to warrant a buy rating just yet. Instead, it continues to believe that Allkem Ltd (ASX: AKE) and IGO Ltd (ASX: IGO) are the ones to buy. That's because its analysts "continue to prefer low-cost assets of scale into lithium price declines."
