Analyst Jeff Osborne of TD Cowen maintained a Hold rating on Li-Cycle Holdings (LICY – Research Report), with a price target of $2.00.
Jeff Osborne’s Hold rating on Li-Cycle Holdings is primarily due to a combination of factors, including the company’s ongoing review of its Rochester hub and its current financial status. Despite having spent $301.3mn on the hub, Li-Cycle now projects the total cost to be between $850mn and $1.0bn, significantly exceeding the initial guidance of $560mn. Coupled with cash preservation concerns, with only $100mn in cash on hand as of November 10, the company’s financial position appears strained.
Furthermore, the company has exhibited a high burn rate, having already used approximately $37mn in the fourth quarter of 2023. Despite this, the pause on the Rochester hub project is expected to reduce the monthly cash burn. Additionally, Li-Cycle’s 3Q23 adjusted EBITDA was approximately $39mn, indicating a clear need for near term capital. Considering these factors, the company is currently exploring financing and strategic alternatives with the assistance of Moelis and other advisors. The company aims to secure $400mn in the first quarter of 2024 before closing a $375mn Department of Energy loan, which is required for the hub to proceed. Osborne’s Hold rating is therefore reflective of these financial challenges and uncertainties.
According to TipRanks, Osborne is an analyst with an average return of -0.6% and a 39.80% success rate. Osborne covers the Energy sector, focusing on stocks such as First Solar, Plug Power, and Enphase Energy.
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Li-Cycle Holdings (LICY) Company Description:
Peridot Acquisition Corp is a blank check company.
Read More on LICY:
- Li-Cycle adopts limited duration shareholder rights plan
- Li-Cycle cut to Market Perform at TD Cowen on lack of financing visibility
- Li-Cycle downgraded to Market Perform from Outperform at TD Cowen
- Li-Cycle pauses construction of Rochester Hub Project pending review
- Li-Cycle, Glencore accelerate plans for European recycling hub
