The Core Lithium Ltd (ASX: CXO) share price has started 2023 in a positive fashion.
As you can see below, the lithium developerâs shares have rebounded strongly from significant weakness in December.
This leaves Core Lithium’s shares trading almost 17% higher year to date at $1.19.
Where next for the Core Lithium share price?
Unfortunately, the team at Goldman Sachs believes the companyâs shares are heading lower again from here.
According to a note from this morning, the broker has reiterated its sell rating and 95 cents price target.
Based on the current Core Lithium share price, this suggests that the ASX 200 lithium share could tumble 20% over the next 12 months.
What did the broker say?
The main reason for Goldmanâs bearish sentiment is the companyâs valuation. The broker explained:
CXO looks relatively expensive vs. peers trading at 1.4x NAV (peer average ~1.0x; on GSe LT US$1,000/t spodumene), pricing in ~US$2,050/t (peer average ~US$1,100/t) or implying current pricing persists for ~1.5 years (peer average <1 year), while also having the lowest average operating FCF/t LCE â essentially embedding significant resource upside and capacity expansion/life extension ahead of fundamentals, in our view.
Goldman also believes production risks are not appreciated by the market. It adds:
We see production risk as the Finniss project moves through ramp up on project complexity (moving between different open pits and underground configurations), and the required exploration/resource upside to support capacity expansion/life extension currently priced into the stock looks significant.
Overall, the broker feels investors should be skipping Core Lithium and buying rival Allkem Ltd (ASX: AKE) right now. As covered here, Goldman Sachs has a buy rating and $15.20 price target on the latter.
The post Here’s what Goldman Sachs is saying about the Core Lithium share price now appeared first on The Motley Fool Australia.
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More reading
- Here are the 3 most heavily traded ASX 200 shares on Thursday
- Which ASX lithium shares are producing and which are not in 2023?
- Why has the Core Lithium share price already surged 18% this year?
- Will Core Lithium turn a profit in 2023?
- Here are the 3 most heavily traded ASX 200 shares on Tuesday
Motley Fool contributor James Mickleboro has positions in Allkem. 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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