Liontown Ltd (ASX: LTR) shares are a popular option for investors looking at the lithium industry.
But are they a good option? Let's see what analysts at Ord Minnett are saying about the lithium miner.
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What is the broker saying?
Ord Minnett was pleased with the company's performance during the first half of FY 2026, highlighting that its net loss was smaller than expected. It said:
Liontown posted an underlying first-half FY26 net loss that was smaller than market expectations, as reduced tax charges and benefits from non-cash inventory movements outweighed higher-than-anticipated depreciation and amortisation (D&A) expenses, while the rest of the result was as expected.
In addition, it notes that the company has reaffirmed its production guidance for FY 2026 and hit a 1.5 million tonnes per annum run rate. But it won't be stopping there, with the company looking to grow its production to 2.8 million tonnes per annum next year.
At the same time, Liontown is expecting to reduce its unit costs meaningfully, which leaves it well-placed to generate material free cash flow at current prices. Ord Minnett said:
The lithium miner reiterated FY26 production guidance for the Kathleen Valley project in Western Australia and for the project to reach a run rate of 1.5 million tonnes per annum (Mtpa) of spodumene concentrate by the end of the March quarter this year, before rising to a run rate of 2.8Mtpa by the end of the June quarter in 2027.
The company forecasts reduced unit costs – $855–1045 per tonne on a 5.2% lithium oxide basis (SC5.2) versus market and Ord Minnett expectations of $913 per tonne and $934 per tonne, respectively– as the underground mining operation contributed the largest proportion of ore, rather than the open pit, by the end of FY26. Liontown sees a consistent recovery rate of circa 70% once the underground ore becomes the main feedstock.
Should you buy Liontown shares?
According to the note, the broker has put an accumulate rating on Liontown shares with a $1.90 price target.
Based on its current share price of $1.71, this implies potential upside of 11% for investors over the next 12 months. It concludes:
Post the result, we have cut our EPS estimates by 12.0% to incorporate increased finance costs and higher D&A charges, while our FY27 and FY28 forecasts are trimmed by 2.4% and 3.0%, respectively, to account for increased selling, general and administrative(SGA) expenses with a partial offset from reduced lease payments. We maintain our target price of $1.90 but have raised our recommendation to Accumulate from Hold on valuation grounds.
