Piper Sandler initiates coverage on Lithium Americas (LAC.US) with an initial Neutral rating and a price target of $3.90. The analyst also notes that the stock is highly sensitive to a series of variables that include the lithium market supply-demand outlook and the timing of the Thacker Pass expansion project.
Piper Sandler analyst Charles Neivert said Lithium Americas is the only lithium stock in the firm’s coverage with a rating above “hold,” primarily because the company’s lithium production doesn’t begin to ramp up until 2028 and the initial production funding is largely from DOE loans and General Motors contributions.
Neivert said the loans, GM contributions, contracts and start date have significantly reduced the company’s risk.
The key factors for the Neutral rating are that Lithium Americas “won’t sell at a time when we think the final lithium demand growth is least constructive,” Neivert said, adding that when Thacker Pass starts producing, the lithium supply-demand outlook will be more balanced and the pricing and margin will be better.
The lithium price is still weak, according to S&P Global Insights data, with the price falling to $13,000 a ton in June, the lowest in 35 months, and Lithium Americas shares are not far from their four-year lows.