Liontown Resources Limited (ASX: LTR) is a battery metals exploration and development company.
It operates mining sites mostly in Western Australia including its flagship Kathleen Valley (spodumene) Lithium Project.
Yesterday Liontown Resources shares fell more than 2.7%.
Broker Macquarie released a report last week with an updated price guidance on the lithium miner, along with analysis of the industry as a whole.
Let's see what the broker had to say.
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Lithium downgrade
Macquarie has significantly downgraded its lithium price forecasts, cutting 2025 spodumene prices by 19% to US$715/tonne—18% below market consensus—and reducing 2026–2028 prices by up to 29%.
This is due to faster-than-expected supply growth, particularly from Africa, outpacing demand, which has weakened in the short term, especially from the energy storage sector.
The anticipated supply-demand rebalance has been pushed back to 2029 (from 2028), and long-term prices have also been cut by 15% to US$1,100/tonne.
This bearish outlook is relevant for Liontown Resources shares, whose future earnings depend heavily on spodumene prices.
Lower and slower-recovering prices could delay profitability for its Kathleen Valley project, increase competition from African producers, and dampen investor sentiment toward the stock.
The broker noted many investors now expect too much lithium supply in 2025, especially if Chinese company Contemporary Amperex Technology keeps running.
Macquarie warned that if hard rock lithium producers keep getting more efficient, prices could still fall further.
Updated price target
Addressing the Liontown Resources price target, the broker commented:
We downgrade LTR to Underperform on our weaker Li outlook.
We cut our target price by 15% to A$0.55/sh due to valuation decreases due to spodumene price decreases (short, mid and long-term) which is partially offset as we reduce our WACC from 10.5% (real) to 8.0% as we take into account LTR's lower cost of debt.
This is a downgrade from its previous price target of $0.65.
From its current stock price of $0.70, Macquarie expects a 21.4% decline in Liontown Resources share price based on their $0.55 target.
