The lithium industry has come under significant pressure over the last 12 months due to falling battery materials prices.
While this is disappointing, it could have created a buying opportunity for investors.
For example, listed below are three ASX lithium shares that analysts are bullish on:
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Arcadium Lithium (ASX: LTM)
There could be big returns on offer with this lithium giant according to analysts at Bell Potter. The broker has a buy rating and $10.40 price target on the ASX lithium share.
Its analysts are bullish due to its diversified exposure to lithium. They said:
LTM provides the largest, most diversified exposure to lithium in terms of mode of upstream production, asset locations, downstream processing and customer markets. It is a key large-cap leverage to lithium prices and sentiment, which we expect to improve over the medium term. The group has a strong balance sheet and growth portfolio.
Liontown Resources Ltd (ASX: LTR)
The team at Bell Potter also sees a huge amount of value in this lithium developer. The broker currently has a speculative buy rating and $1.90 price target on its shares.
It was very pleased with the company's recent funding news and highlights that its Kathleen Valley (KV) lithium project has a lot of strategic value. It said:
With the near-term funding overhang reduced, we have lifted our LTR valuation to $1.90/sh (previously $1.60/sh). LTR's 100% owned KV lithium project remains highly strategic in terms of its stage of development, long mine life and location. LTR has offtake contracts with top tier EV and battery OEMs (Ford, LG Energy Solution and Tesla). Hancock Prospecting has a 19.9% interest in LTR. LTR is an asset development company; our Speculative risk rating recognises this higher level of risk.
Pilbara Minerals Ltd (ASX: PLS)
Finally, analysts at Morgans are feeling very positive on this lithium giant. The broker currently has an add rating and $4.30 price target on the ASX lithium share.
It supports the company's decision to grow production during these tough times. It said:
We view PLS as a fundamentally strong and globally significant hard-rock lithium miner. The company has successfully executed on ramping up the expansion of Pilgangoora, while progressing plans to expand output (P680 and P1000). Supported by a strong balance sheet, with net cash at ~A$2.1bn at the end of December, PLS' expansion plans remain uniquely undeterred by the significant weakness in lithium prices. For PLS, the best form of defence against lithium prices is to stay on the attack, with its medium-term plans to continue expanding its production aimed primarily at building greater economies of scale and a more defensive margin.
