The ASX lithium share Liontown Ltd (ASX: LTR) has been an incredible performer over the last 12 months, rising by more than 170%, as the chart below shows. This is a good time to ponder whether the business can continue rising from here.
I’m going to look at UBS’ view on the ASX lithium share and the lithium market as a whole. UBS describes Liontown as an emerging lithium producer in Western Australia, which owns 100% of the Kathleen Valley spodumene project.
Positive return possible for the Liontown share price
Some analysts like to put a price target on a business. A price target is where the broker thinks the share price of a business may be trading in a year from the time of the investment call.
UBS currently has a price target of $1.80 on the ASX lithium share, suggesting a possible rise of 1% over the next year from where it is at the time of writing. That’s not the most exciting price target around.
The broker notes that the business’ expansion plans, including Liontown’s 4mt per annum plan, make sense after it was deferred in the recent ‘downcycle’ for lithium.
While UBS isn’t (currently) suggesting that the Liontown share price could climb significantly from here over the next 12 months, it bodes well for shareholders who have seen major gains that analysts think the ASX lithium share will hang onto those gains.
Why is the outlook for lithium so much stronger?
In a note, UBS increased its estimate for the 2026 lithium price to US$1,800 per tonne, up from a previous estimate of US$1,100 per tonne. However, its long-term price estimate is still US$1,200 per tonne.
The broker said that there are ongoing supply disruptions, further anticipated disruptions to Chinese lepidolite producers (CATL) and resilient overall demand.
In the note, UBS said that the lithium demand is being driven by battery energy storage systems (BESS), which has seen an estimated increase in demand of up to 11% between 2025 to 2030. The broker is expecting the lithium market to move into a deficit from 2026 onwards.
On UBS’ numbers, BESS will account for around 31% (1.2TWh) of total battery demand by 2030 compared to around 20% today.
UBS is forecasting that the lithium price could climb to US$2,850 per tonne in 2027 and US$2,625 per tonne in 2028.
But, the broker is also expecting a supply response, so UBS upgraded its outlook production in the sector by up to approximately 5% through to 2028.
Time will tell how well UBS’s forecasts has captured the upswing in market conditions for lithium.
The post Liontown shares: After a year of outperformance, is it still a buy? appeared first on The Motley Fool Australia.
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Motley Fool contributor Tristan Harrison 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.