Takeover offer ‘reasonable but not full’: Analyst says Liontown shares are worth more

Liontown Resources Ltd (ASX: LTR) shares have been on fire this week thanks to a takeover approach.

And while they are pulling back by 5% this morning, the lithium developer’s shares are still up over 60% this week.

Where next for Liontown shares?

Despite its meteoric rise, the team at Bell Potter believes that the Liontown share price can keep rising from here.

According to a note this morning, the broker has retained its speculative buy rating with an improved price target of $3.35.

Based on where its shares are currently trading, this suggests potential upside of 38% for investors over the next 12 months.

Albemarle offer ‘reasonable but not full’

Bell Potter has been looking over Albemarle’s $2.50 per share takeover proposal for Liontown and believes it is reasonable. However, it feels the company is worth far more than what has been tabled.

And with management holding a sizeable number of Liontown shares, it doesn’t appear to believe that Albemarle will be able to bully its way into acquiring the lithium developer. The broker commented:

The corporate interest in LTR from a high-profile US-based industry participant speaks to the quality of Kathleen Valley and the scarcity of growth opportunities in the sector. We view the value of ALB’s proposal as reasonable, but not full; with additional value to be argued from LTR’s de-risking of Kathleen Valley, downstream projects and complementary ESG strategy and location. We also believe LTR will ultimately be capable of realising this value in the absence of a corporate tie-up.

In light of this, Bell Potter appears to see Liontown as a great option for investors looking for lithium exposure. Though, it highlights that as an asset development company, its “speculative risk rating recognises this higher level of risk.”

The post Takeover offer ‘reasonable but not full’: Analyst says Liontown shares are worth more 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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