Do you own Liontown Resources Ltd (ASX: LTR) shares? If you do, you will no doubt be aware that it won't be long until Liontown shifts from being a lithium developer to a lithium miner.
The company is aiming to commence production in a matter of weeks. This means it could soon be generating revenue and maybe even some earnings.
But just how profitable could Liontown be in the current environment of low lithium prices? Let's see what Goldman Sachs is forecasting for the miner through to FY 2029.
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Liontown earnings estimates
Firstly, it is worth noting that Goldman is among the most bearish brokers when it comes to lithium prices. So, its earnings estimates could prove short of the mark if prices improve quicker than it expects.
Though, conversely, it is equally worth noting that the broker has been among the most accurate predictors of lithium prices in recent times. So, these forecasts could end up being more precise than others.
Moving on. In FY 2025, Goldman is forecasting total spodumene production of 146kt. This is expected to underpin revenue of $143 million but an underlying loss of $162 million.
In FY 2026, total spodumene production is expected to increase to 439kt. Goldman believes this will lead to revenue of $585 million and a maiden profit of $19 million.
It will be onwards and upwards for the lithium miner from there. In FY 2027, Goldman expects spodumene production of 510kt, revenue of $794 million, and underlying earnings of $108 million.
After which, in FY 2028, the broker is forecasting spodumene production of 578kt, revenue of $985 million, and underlying earnings of $152 million.
Finally, in FY 2029, Goldman expects total spodumene production of 658kt. From this, the broker is forecasting Liontown to generate revenue of $1,326 million and underlying earnings of $330 million.
In summary, Goldman expects the following for underlying earnings:
- FY 2025 – $162 million loss
- FY 2026 – $19 million profit
- FY 2027 – $108 million profit
- FY 2028 – $152 million profit
- FY 2029 – $330 million profit
Should you buy Liontown shares?
Goldman thinks investors should keep their powder dry for the time being. It has a neutral rating and $1.15 price target on Liontown's shares.
While this implies potential upside of 25% for investors, it still isn't enough for Goldman to be more positive. Though, it concedes there could be significant value on offer here when risks reduce. It commented:
Though perceived funding risks are largely alleviated, and cost/ramp up risks appear increasingly priced in, we rate LTR a Neutral on: 1) Valuation, where LTR is trading at a modest discount to peers, though with significant potential valuation uplift from de-risking/valuation roll-forward and a high valuation sensitivity to our LT lithium pricing; 2) Ramp up/cost risks increasingly priced in; 3) Strong medium-term capacity outlook from large, high quality resource.
