Down 40% in 2022: Is the Liontown share price a bargain buy?

Man drawing an upward line on a bar graph symbolising a rising share price.

Man drawing an upward line on a bar graph symbolising a rising share price.

The Liontown Resources Limited (ASX: LTR) share price was out of form on Tuesday.

The lithium developer’s shares ended the day 2% lower at $1.01.

This means the Liontown share price has now lost 40% of its value in 2022.

Is the Liontown share price in the buy zone?

According to a recent note out of Bell Potter, its analysts believe the weakness in the Liontown share price is a buying opportunity.

Its analysts currently have a speculative buy rating and $2.87 price target on the company’s shares.

Based on where its shares currently trade, this implies potential upside of ~180% for investors over the next 12 months.

What did the broker say?

Bell Potter notes that Liontown has approved the development of its Kathleen Valley Lithium Project in Western Australia.

This follows a major deal with auto giant Ford for both offtake and financing and means the tier-1 project is now fully funded.

Combined with other offtake agreements, including one with Tesla, the broker is very positive on Liontown’s outlook.

It commented:

LTR has announced a Final Investment Decision (FID) for its flagship hard-rock lithium project in Western Australia’s northern goldfields, Kathleen Valley. The FID coincides with announcing a $300m debt finance facility with Ford Motor Company (NYSE: F) and a further 150ktpa spodumene (SC6) binding offtake agreement.

LTR has provided updated Kathleen Valley capital estimates of now $545m (previously $473m) and an estimate of working capital requirements of $93m. With the Ford debt facility and existing cash ($466m at 31 March 2022), Kathleen Valley is now fully funded. Further supporting the project, LTR has full-form binding offtake agreements covering over 80% of production in the first five years with LG Energy Solution, Tesla and Ford.

The post Down 40% in 2022: Is the Liontown share price a bargain buy? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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