'Cheapest' lithium miner: Broker says Sayona Mining shares could rise 200%+

Is this the cheapest lithium miner out there?

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It's fair to say that Sayona Mining Ltd (ASX: SYA) shares have been having a tough time of late.

For example, the US-based lithium miner's shares have lost 30% of their value since this time last month.

This stretches their 12-month decline to a very disappointing 80%.

To put that into context, a $20,000 investment a year ago would now be worth just $4,000.

While that is disappointing, it could prove to be a buying opportunity for brave investors.

Sayona Mining shares tipped to rise materially

Firstly, the only major broker covering the miner is Macquarie and it has a neutral rating and 4 cents price target on its shares. This is broadly in line with where they trade today.

However, that doesn't mean there aren't boutique brokerage firms seeing more value in Sayona Mining shares.

For example, Petra Capital is feeling very bullish on the lithium miner. So much so, it has just retained its buy rating and 14 cents price target on its shares. This suggests over 200% upside for investors based on its current share price.

The broker believes that the company is being setup to operate through the lithium cycle and is looking forward to the upcoming results of its strategic review. It commented:

No big surprises in SYA's 1HFY24 interim financials (100% consolidated basis, SYA 75%). We like the management commentary that SYA is setting up NAL to produce through the cycle (which may now be turning). The strategic review is due before the end of Mar-24 and we expect it to focus on increasing volume and optimising for unit costs.

And while its analysts are not expecting the financial pain to ease in the second half, they note that Sayona Mining has a very strong balance sheet that is more the capable of handling this pressure. They add:

Though NAL made a small (A$3.4m) operating cashflow profit in the half, we expect lower average prices in the second half (that are baked in) to extend the financial pain for FY24 before improving thereafter. SYA is now pushing more tonnes, has A$158m in cash and no debt.

In light of the above, the broker believes Sayona Mining shares are cheap in comparison to peers. It concludes:

It trades as the cheapest of the lithium producers on EV/EBITDA and will see more investor interest as lithium commodity prices turn up. Retain BUY and PT of A$0.14/sh (no change).

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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