Arcadium Lithium shares rise as Morgans gives 'add' rating
Make us a preferred source
Make us a preferred source on Google
The news: Morgans analysts have initiated coverage on dual-listed lithium producer Arcadium Lithium with an ‘add’ rating on the back of near term growth potential.
The numbers: Morgans assigned a 12-month price target of $5.40 on Arcadium’s ASX-listed shares.
Meanwhile, Goldman Sachs analysts also see a 32% upside in Arcadium shares despite trimming their 12-month price target by 4% to $5.35 due to expansion projects taking longer and capex increases higher than expected.
The stock was trading 1.23% higher at $4.109 in early trading.
The context: Morgans said Arcadium has been sold off heavily since its merger, mainly due to the deteriorating lithium price, merger concerns, and limited disclosure since its listing on the NYSE.
Arcadium was formed last year through the merger of Australian producer Allkem and its US peer Livent.
What they said: "While these concerns have merit, we see upside from here," Morgans analysts said in a note.
"We view Arcadium’s current share price as undervalued against its organic growth pipeline, ability to achieve higher average realised prices through long-term floor and ceiling contracts, and its ability to stay nimble in a deteriorating market given its diversified operations and product offering."
The sources: Morgan research, Goldman Sachs research
