Liontown Resources Ltd (ASX: LTR) shares are having a tough session on Thursday.
In morning trade, the lithium miner's shares are down 5% to 78 cents.
This follows broad weakness in the lithium industry, with most miners and developers trading lower today.
Is this a buying opportunity for investors? Let's see what analysts at Macquarie Group Ltd (ASX: MQG) are saying about the company.
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What is Macquarie saying about Liontown?
Unfortunately, the team at Macquarie doesn't see this weakness as a buying opportunity.
In fact, the broker is recommending that investors join in with the selling and offload Liontown's shares today.
But before we tackle that, let's see what it was saying about its quarterly update this week.
In respect to what it liked about the update, the broker said:
What we liked. Stronger sales, lower operating costs: Spodumene sales for 4Q FY25 of 97.3kt were 6% higher than the Visible Alpha (VA) consensus. Operating costs of A$898/t were 6% lower and up 32% QoQ, driven by introduction of ore sorting costs and the drawdown of stockpiles.
As for what it didn't like, Macquarie had a lot to say. It adds:
What we didn't like. FY26 guidance below market expectations: LTR has released FY26 guidance for the first time, with spodumene concentrate guidance of 365-450kt, with the midpoint of 408kt 7% lower than VA consensus. The FY26 AISC of A$1,060-1,296/t, with a midpoint of A$1,178/t, is 11% higher, as the company transitions from dual open pit and underground mining to 100% underground production. Total capex of A$100-125m, with a midpoint of A$113m, is 5% higher than VA consensus.
Sell Liontown shares
According to the note, the broker has reaffirmed its underperform rating and 55 cents price target on Liontown's shares.
Based on its current share price of 78 cents, this implies potential downside of almost 30% for investors over the next 12 months.
Commenting on its sell recommendation, Macquarie said:
Underperform: LTR has managed costs effectively in a difficult lithium market, ending FY25 with net debt of A$541m (including cash of A$156m, an A$17m QoQ reduction). But with gearing of >70% (net debt/equity) and net debt/Ebitda of >8.0x, its balance sheet remains highly levered.
Catalysts: Kathleen Valley site tour (31/07), which should provide an overview of the underground ramp up to 2.8Mtpa, and overview of the processing plant (with a recovery target of 70% by 3Q FY26).
