The lithium industry has been a sea of red over the last 12 months.
And while most ASX lithium stocks have shed significant value, few have lost as much as Core Lithium Ltd (ASX: CXO) and Liontown Resources Ltd (ASX: LTR) shares.
Since this time last year, Core Lithium shares are down 84% and Liontown shares are down 69%.
Which one could be a buy now? Let's take a look and see which analysts prefer.
Core Lithium shares
Unfortunately, the broker community isn't feeling overly positive on Core Lithium despite its fall from grace.
For example, Goldman Sachs is arguably the most positive broker with its neutral rating. However, its price target of 8 cents implies potential downside of 14% for investors from current levels.
Goldman highlights that there are risks to the restart of its lithium mining operations, which are currently suspended indefinitely. It said:
In the current pricing environment, a mine restart looks highly unlikely ahead of the next wet season, in our view and, given the Grants open pit has ~12 months of life, likely tied to a development decision on BP33 (with its own funding risks) to support a processing plant restart/rehiring, increasing the risk of a longer gap in production. Following a restart, production risk in a steady state operation remains as the Finniss project moves through ramp ups on project complexity moving between different open pits and underground configurations.
Liontown shares
Analysts at Bell Potter think that this lithium miner's shares are in the buy zone right now. Though, only for investors with a high tolerance for risk.
At the end of last month, the broker put a speculative buy rating and $1.90 price target on Liontown's shares.
Based on its current share price of 85 cents, this implies potential upside of approximately 120% for investors over the next 12 months.
Bell Potter likes Liontown due to the quality and strategic appeal of the Kathleen Valley Lithium Project, which has just commenced production. It said:
LTR's 100% owned Kathleen Valley lithium project remains highly strategic with initial production imminent, a long mine life and located in a tier-one location. LTR has offtake contracts with top tier EV and battery OEMs. Under our modelled assumptions, we expect that LTR is fully funded to free cash flow. We have made no changes to our earnings estimates in this report. LTR is an asset development company; our Speculative risk rating recognises this higher level of risk.
