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Lithium Americas (NYSE:LAC) is initiated with a Neutral rating and $3.90 price target at Piper Sandler, while noting the valuation is highly sensitive to a number of variables that involve significant near-term risk, including lithium market conditions and construction timing for Thacker Pass phase 2.
Piper Sandler analyst Charles Neivert says Lithium Americas (LAC) is the firm’s only lithium stock rated above Underweight, largely due to the company’s lithium production not ramping until 2028 and funding for the initial phase of production is largely in place through a Department of Energy loan and an additional contribution from General Motors.
The loans, GM funding and contracts, and the start-up timing significantly reduce the risk profile for the company, Neivert says.
The key element of the Neutral rating is that Lithium Americas (LAC) “will not be selling into what we see as the least constructive period of the eventual lithium demand ramp-up,” believing that when Thacker Pass actually starts production, the lithium supply-demand environment will be more balanced, bringing better pricing and margins.
Lithium Americas (LAC) shares currently trade not far off four-year lows, as lithium prices plunged below $13,000/ton in June, the lowest in 35 months, according to S&P Global Insights.
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