The lithium industry has been a difficult place to invest in recent times.
Due to falling battery material prices, a number of ASX 200 lithium stocks have recorded sizeable declines over the past 12 months.
The good news for investors is that this weakness could have created a buying opportunity according to analysts.
For example, the two ASX 200 lithium stocks listed below have been named as buys and tipped to rise strongly from current levels. Here's what they are saying about them:
IGO Ltd (ASX: IGO)
According to a note out of Goldman Sachs, its analysts think that IGO is an ASX 200 lithium stock to buy.
As well as trading at a discount to peers, the broker highlights that its world class Greenbushes operation's low costs means it is well-placed in the current environment. It said:
We rate IGO as Buy relative to our lithium coverage, where on valuation IGO is trading on 0.8x NAV and pricing ~US$965/t spodumene, at a discount to peers (~1x NAV and ~US$1,025/t), with near-term FCF yields remaining positive and attractive vs. peers (<0% on average).
We reiterate our belief that further Greenbushes expansion remains one of the most economically compelling brownfield lithium projects, where the JV also retains significant optionality around extending/converting the TRP, while the resource likely underpins even further expansion longer-term (i.e., CGP5, subject to market conditions). Further, we note on our mass balance analysis that JV partners may need further Greenbushes expansions.
Goldman has a buy rating and $6.20 price target on its shares. Based on its current share price of $5.09, this implies potential upside of 22% for investors over the next 12 months.
Liontown Resources Ltd (ASX: LTR)
Over at Bell Potter, its analysts think that Liontown Resources could be an ASX 200 lithium stock to buy now.
Although the company has recently downgraded its production plans, this did not come as a surprise to Bell Potter. And, outside this, the broker continues to see the 100% owned Kathleen Valley lithium project as a highly strategic asset. It explains:
LTR's FY25 guidance was broadly as we had modelled and we expect the lower long-term throughput rate to drop Kathleen Valley's production profile by around 5%. On our estimates and at current spot spodumene concentrate prices, LTR's balance sheet is supportive to the end of FY25; costs should then improve as production approaches steady state over FY26-27.
LTR's 100% owned Kathleen Valley lithium project remains highly strategic in terms of scale, long project life and location in a tier-one mining jurisdiction. 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. LTR is an asset development company; our Speculative risk rating recognises this higher level of risk.
Bell Potter has a speculative buy rating and $1.40 price target on Liontown's shares. This suggests that upside of 64% is possible from current levels.
