The Liontown Resources Ltd (ASX: LTR) share price has been well and truly sold off in 2024.
Since the start of the year, the lithium miner's shares have lost almost 65% of their value.
Could things be better in 2025 and could the company's shares make a stellar comeback? Let's find out.
Will the Liontown share price make a stellar comeback?
The team at Bell Potter sees potential for a huge comeback in 2025, especially given its belief that the lithium market is heading to a deficit in the near future.
But before we get into that, let's hear what the broker is saying about this week's shipments update. It said:
LTR has announced that its largest spodumene concentrate cargo, and the first to offtake and funding partner LG Energy Solution, is scheduled to depart from the Port of Geraldton today. We calculate that the ~33kwmt shipment (11kwmt going to LGES) takes LTR's total spodumene concentrate sales to almost 90kwmt (82kdmt).
With 53kdmt produced over three months to 31 October 2024, the latest sales required production over the following 5 weeks of around 30kdmt and suggests the Kathleen Valley ramp-up is going well.
In light of the above, Bell Potter believes the company is on course to deliver on expectations in the first half. It adds:
LTR's guidance implies 1H FY25 production of 90- 110kdmt (SC6 equivalent); latest performance and the likelihood of a further shipment before the end of December 2024 suggests that this target is within reach.
Back to the comeback
As mentioned above, Bell Potter thinks the Liontown share price could make a huge comeback as the lithium market tightens. Commenting on the market, it said:
We calculate that recent supply curtailments from Australian producers (including LTR) have deferred around 50kt of Lithium Carbonate Equivalent from the market (around 4% of 2024 supply). On our supply-demand modelling, the cuts result in a smaller market surplus in 2025 and brings forward our estimate of a market deficit to 2026 (previously 2027). Quarter to date SC6 prices have averaged around US$800/t CFR.
As a result, this morning the broker has retained its speculative buy rating and $1.40 price target on its shares.
Based on the current Liontown share price of 60 cents, this implies potential upside of 133% for investors over the next 12 months. It concludes:
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.
