It has been a very tough 12 months for Lake Resources N.L. (ASX: LKE) shares.
Since this time in 2023, the lithium developer's shares have lost 88% of their value.
Is this a buying opportunity? Let's see what analysts at Bell Potter are saying about the company following a review of the lithium industry.
Are Lake Resources shares a buy?
Unfortunately for shareholders, after having a speculative buy rating on its shares for some time, the broker has now downgraded them and taken an axe to its valuation.
According to the note, its analysts have downgraded Lake Resources shares to a speculative hold rating with a 12 cents price target (from 25 cents previously).
While this still implies reasonably large upside potential of 20%, the broker doesn't appear to believe it is sufficient to warrant a more positive rating.
The broker revealed that the downgrade was made largely on the back of lower lithium price expectations. It said:
Our lower long term lithium carbonate price outlook has materially reduced our LKE valuation to $0.12/sh (previously $0.25/sh). […] For 2024, we estimate spodumene concentrate (SC6) prices averaging US$1,100/t (previously US$2,500/t) and lithium carbonate prices US$16,250/t (previously US$30,000/t).
It is worth noting that the broker still sees a lot of potential in the lithium developer. It also appears to see the company as a good M&A target due to the Kachi project's large scale. It adds:
Key to LKE's success over 2024 will be maintaining tension with respect to financing and offtake, amid a weak lithium market. In parallel, FEED and permitting will continue. The Kachi project's large scale and DLE technology selection does potentially make LKE a strategically important company over the long term in terms of technology selection and new supply. DLE brings ESG benefits including less land disturbance and water consumption.
