The Liontown Resources Ltd (ASX: LTR) share price has been having a tough time over the last 12 months.
So much so, the lithium developer's shares were the worst performers on the ASX 200 index.
During the period, the company's shares lost a whopping 68% of their value. This means that if you had invested $10,000 into Liontown at the start of the financial year, you would have ended up with just $3,200.
Has this created a buying opportunity for investors? Let's take a look at what analysts at Goldman Sachs are saying about the company.
Liontown share price could jump 25%+
Analysts at Goldman Sachs have been looking at the company following its recent funding update.
And while the broker is not willing to put a buy rating on its shares right now, it does see a lot of value in the Liontown share price at current levels.
The note reveals that Goldman has reaffirmed its neutral rating with a trimmed price target of $1.15 (from $1.35). Based on its current share price of 91 cents, this implies potential upside of 26% over the next 12 months.
Goldman believes funding risks are now out of the way and cost and ramp up risks are priced in. It said:
Though perceived funding risks are largely alleviated, and cost/ramp up risks appear increasingly priced in, we rate LTR a Neutral on valuation, where LTR is trading at a discount to our revised NAV at ~0.85x, and an implied LT spodumene price of ~US$1,070/t (in line with peers at ~0.85x & ~US$1,080/t), though with significant potential valuation uplift from de-risking/valuation roll-forward.
Speaking of costs, the broker went into further detail about its operating costs, which are expected to be updated in the near future. It adds:
While the ramp up of the underground (UG) mine (first ore late CY24) and associated costs remain a key perceived risk for the stock (from our investor discussions), we see this risk as more modest and increasingly priced in on the current mine development/extraction plan. While LTR has not given updated cost estimates (noting processing is set to start in July and optimisation studies are ongoing; last update Oct-23), we update our estimate of underground mining/unit costs based on our bottom-up quarterly analysis of listed Australian gold assets, where we find escalation of underground mining costs has begun to ease, on average, with underground unit costs showing signs of broadly flat to only modest increases since LTR's last cost update.
All in all, things could be looking up for Liontown and its share price. Though, investors may want to keep their powder dry until the company updates its costs and ramps up production successfully.
