The ASX lithium share sector has been one of the worst performers in 2024 to date. However, it's possible the sector could be a gold mine for value investors if a recovery occurs.
Since the start of the year, the Pilbara Minerals Ltd (ASX: PLS) share price is down 47%, the Liontown Resources Ltd (ASX: LTR) share price is down 68%, the Sayona Mining Ltd (ASX: SYA) share price is down 66%, the IGO Ltd (ASX: IGO) share price is down 46%, and the Core Lithium Ltd (ASX: CXO) share price is down 70%.
Ouch.
However, there may be hope on the horizon if investors start viewing ASX lithium shares as an undervalued opportunity and/or if the lithium price starts rising.
Let's have a look at what one expert thinks.
Citi views a possible recovery in the medium-term
According to reporting by The Australian, broker Citi thinks there will be a lithium oversupply in 2025 but ASX lithium shares could be cheap enough to be good value, and there may be hope in the next few years for the supply and demand relationship.
Citi analyst Kate McKutcheon said:
Recent supply cuts and strong China battery production linked to export front-loading ahead of potential US tariffs have helped the market rebalance.
However, given the soft ex-China EV demand outlook (US and Europe) and payback from export front-loading, we model a further surplus in 2025.
On paper, we see lithium deficits re-emerging in 2026/2027, albeit small relative to inventory availability…price upside appears capped by high inventories and idle capacity that could restart quickly.
McKutcheon also said, according to The Australian, that higher incentive prices are needed for lithium shares to overcome the higher capital expenditure and operating expenditure costs, particularly the chemicals. To date, there haven't been significant incentives to overcome this.
The Australian Financial Review also reported that Citi can't see a near-term catalyst that could help spark a rebound for ASX lithium shares, aside from the re-stocking of lithium inventory after the Chinese New Year.
ASX lithium share price targets
A price target tells investors where a broker thinks the share price could be in 12 months from the time of the investment call.
Citi upgraded its rating on Liontown Resources shares to neutral (up from sell) but cut its price target to 60 cents, down from 75 cents.
The price target on IGO shares was reduced to $5.30, down from $5.70.
Pleasingly, the price target on Mineral Resources Ltd (ASX: MIN) shares was increased to $35, up from $33.
The Pilbara Minerals share price target was cut to $2.40.
Therefore, Citi is suggesting these ASX lithium shares could collectively rise approximately 10% in the next year from where they are today, but it's not predicting big gains. Time will tell whether Citi is too positive or not optimistic enough.
