There's no getting away from the fact that Core Lithium Ltd (ASX: CXO) shares have been on an absolute horror run of late.
On Thursday the lithium miner's shares closed the day at 19.5 cents.
This means that they have lost approximately 83% of their value since this time last year.
To put that into context, a $10,000 investment a year ago would now be worth ~$1,700.
And to recoup those losses, Core Lithium's shares would need roughly recover by almost 500%. That's certainly a tall order.
Furthermore, one leading broker believes that its shares haven't even bottomed yet.
Image source: Getty Images
Where next for Core Lithium shares?
According to a recent note out of Goldman Sachs, its analysts have a sell rating and 14 cents price target on its shares.
This implies further downside potential of approximately 28% for investors from current levels.
Goldman thinks Core Lithium's shares are still expensive despite the huge decline over the last 12 months. It said:
We rate CXO a Sell on: (1) Valuation, trading at a premium on ~1.4x NAV and an implied LT spodumene price of ~US$1,300/t (peer average ~0.9x & ~US$1,070/t), with the lowest average operating FCF/t LCE on a more moderated/deferred production ramp up with risk of deferred mine restart, (2) Potential resource growth/ development now likely longer dated, (3) Ongoing production/development funding risk.
It also worth noting that the broker has updated its earnings estimates to reflect the weak out look for lithium prices.
It is now forecasting the following for EBITDA through to FY 2028:
- $58 million in FY 2024
- $4 million in FY 2025
- $17 million in FY 2026
- $56 million in FY 2027
- $105 million in FY 2028
Overall, it looks likely to be a tough few years for Core Lithium.
In light of this, the broker thinks investors should be buying IGO Ltd (ASX: IGO) shares for their lithium exposure. You can read about that recommendation here.
