It has been a very disappointing month for the Core Lithium Ltd (ASX: CXO) share price.

Since the start of February, the lithium miner’s shares are lost 20% of their value.

This follows concerns over falling spot lithium prices and the impact this could have on its profits in the coming years.

Where next for the Core Lithium share price?

Unfortunately, despite the significant pullback in February, one leading broker isn’t recommending investors jump in just yet.

According to a note out of Goldman Sachs, its analysts have reiterated their sell rating and cut their price target on its shares to 90 cents.

This suggests further potential downside of 3.2% for investors from current levels.

And while this downside isn’t overly significant, it is worth noting that many of the other ASX lithium shares under its coverage trade well below their price targets. So, there’s potential for Core Lithium share price to drop into the 70s to 80s based on this.

What did the broker say?

Goldman Sachs continues to believe that lithium prices are on the verge of collapsing. This view is supported by a recent visit to China. It commented:

We note the lithium chemicals spot and forward pricing has continued to decline, with our commodities team reiterating their expectation for lithium prices to decline from 2H23, supported by recent China trip feedback suggesting risk of higher than expected lithium supply, and the larger operating Australian spodumene projects either recently outperforming production expectations (and increasing near term production guidance) or lifting medium term production growth targets.

The broker has also downgraded its earnings estimates to reflect its belief that there will be no more direct shipping ore (DSO) sales. It concludes:

Our FY23 EPS is down c.12% on no longer expecting any further DSO sales as a result of current stockpiles being utilised for DMS commissioning and pit water limiting near term mining volumes, though partly offset by a moderate increase FY23 spodumene production following DMS construction completion. Our 12m PT is lowered to A$0.90/sh (from A$0.95/sh) on the lower near term earnings.

The post The Core Lithium share price crashed 20% In February. What now? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Here are the 10 most shorted ASX shares this week
• Which ASX 200 lithium share takes the crown for dividend yield right now?
• Why are ASX 200 lithium shares having such a stellar run today?
• Why is the Core Lithium share price rebounding 5% on Tuesday?

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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