Liontown shares crash 8% on broker downgrade

Liontown Resources Ltd (ASX: LTR) shares are having a difficult session on Tuesday.

In afternoon trade, the lithium developer’s shares are down a disappointing 8% to $1.16.

What’s going on with Liontown shares today?

There are a couple of reasons why the company’s shares are falling more than most today.

The first reason is weakness in the lithium industry on Tuesday. This has seen a number of ASX lithium stock tumble deep into the red.

Let’s take a look at the state of play in the industry today:

• Core Lithium Ltd (ASX: CXO) shares are down 6.5%
• Lake Resources N.L. (ASX: LKE) shares are 7.5% lower
• Pilbara Minerals Ltd (ASX: PLS) shares have dropped 2.5%
• Sayona Mining Ltd (ASX: SYA) shares are down 5%

What else is weighing on its shares?

Also putting pressure on the lithium developer’s shares today is news that it has been hit with a downgrade from a leading broker.

According to a note out of Citi, its analysts have downgraded Liontown’s shares to a sell rating (from neutral) with a price target of $1.00.

Based on its current share price, this implies potential downside of almost 14% for investors over the next 12 months.

The broker made the move on valuation grounds after a strong rally in recent weeks took its shares beyond the broker’s idea of fair value. It believes the market is currently pricing in a lithium spodumene price almost double current spot levels.

Today’s decline is just another in a long run of declines that shareholders have had to endure. For example, following this latest weakness, the Liontown share price has now lost 55% of its value over the last six months.

The post Liontown shares crash 8% on broker downgrade appeared first on The Motley Fool Australia.

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