A hellacious start to the year for lithium prices has failed to shake Macquarie’s conviction in a number of ASX lithium shares.

In the past month alone, the lithium carbonate price has experienced a swift 21% retreat — signifying an equalising in supply and demand. However, the team at Macquarie has published views today that paint a rosy picture ahead for a few companies in the industry.

Lithium forecasts divided

The investment bank is generally bullish on the lithium sector as a whole. Last month, the broker was across 13 companies in the lithium space, with only one failing to be awarded an outperform rating.

In January, Macquarie shared a note that explained what underpins the team’s positive outlook. The crux of it was an expectation for a prolonged shortfall in lithium supply due to development delays and additional capital being required.

In contrast, Matty Zhao of Bank of America recently provided a lithium critique during an interview on CNBC. During the interview, Zhao discussed the potential for electric vehicle (EV) sales to slow this year, putting pressure on lithium.

This year, globally, we are expecting EV growth of 41%. For China, specifically, we expect growth to slow down to 22% from 95% last year. With that, lithium demand we are expecting 20% [growth] globally, mainly driven by the EV demand growth.

At the same time, we are also seeing a lot of supply coming out from lithium mines — we are expecting 38% lithium supply growth this year. That’s why 2023 is likely to turn into a surplus year for lithium.

Big expectations for these ASX lithium shares

Despite other analysts highlighting the potential for lithium surplus, it appears Macquarie’s perspective remains relatively unchanged.

Today, the broker initiated coverage on Piedmont Lithium Inc (ASX: PLL), Sayona Mining Ltd (ASX: SYA), and Leo Lithium Ltd (ASX: LLL) — all with outperform ratings. These three ASX lithium shares have outpaced the S&P/ASX 200 Index (ASX: XJO) so far this year, as shown above.

Furthermore, the broker’s price targets for each are as follows:

• Piedmont Lithium: $2.10 price target, 140% above the current share price
• Sayona Mining: No price target provided, currently trades at 24.8 cents a share
• Leo Lithium: $1.35 price target, 149% above the current share price

Coincidentally, Piedmont shares have entered a trading halt today after being hit with a short-seller report. Activist investment firm Blue Orca Capital has labelled the future profit plans of this ASX lithium share as “fantasy”.

The post Macquarie tips 3 ASX lithium shares to outperform, one with 150% upside appeared first on The Motley Fool Australia.

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More reading

• Piedmont Lithium share price frozen amid short-seller attack
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Sayona Mining share price dips despite first lithium production
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Why InvoCare, Pentanet, Sayona Mining, and Weebit Nano shares are storming higher

Motley Fool contributor Mitchell Lawler 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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