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Piper Sandler started off coverage on Livent Corporation (NYSE:LTHM) on Monday with an Overweight rating and a price target of $42.
The bullish call on the lithium miner arrives at a time that electric vehicle stocks are being sold off on concerns over valuation and high interest rates.
However, Piper analyst Charles Neivert and team believe that Livent (LTHM) sits in a strong position due to a lithium market likely to remain in a deficit for at least the next three to four years to help support pricing. The expectation for higher earnings for LTHM is noted to be significant in that they could also help support the company's expansion.
"The significant increase in earnings power and the structural changes to the [Livent] balance sheet they bring make 2024 earnings a more accurate representation of the company’s outlook and value."
In August, General Motors Company (GM) announced that it would prepay Livent Corporation (LTHM) $198M for a guaranteed six-year supply of lithium. Livent (LTHM) said the upfront payment strengthens the binding commitments being made by both parties and establishes a foundation for expanding the relationship over time. The GM deal structure is also said to increase flexibility and certainty for Livent as it funds and executes its capacity expansion plan.
The Seeking Alpha Quant Rating on LTHM is flashing Strong Buy.