TD Cowen analyst David Deckelbaum maintained a Buy rating on Arcadium Lithium Plc (ALTM – Research Report) today and set a price target of $10.00.
David Deckelbaum has given his Buy rating due to a combination of factors, including Arcadium Lithium Plc’s strong financial position and strategic business maneuvers. Despite a challenging pricing environment, Arcadium Lithium has a substantial cash reserve of $892 million, which positions it favorably to withstand the current downturn in the lithium market. Additionally, the company’s move to optimize their combined businesses by adjusting production volumes and delaying growth projects is aimed at improving returns, which is seen as a positive step towards emerging stronger from the industry slump.
In terms of financial performance, Deckelbaum has observed that Arcadium Lithium’s fourth-quarter earnings for the legacy Livent business beat EBITDA expectations by 7%. Although there was lighter than expected pricing for Allkem, the 2024 guidance suggests a significant increase in carbonate and hydroxide volumes by 40%, despite a 35% reduction in spodumene output. The company’s overall revenue and EBITDA outlook may be below previous estimates, but the lower capital expenditure guidance and the management of free cash burn, which is well supported by the current cash balance, underpin the Buy rating. Arcadium Lithium’s deferral of growth projects and cost reduction efforts, along with favorable fixed price contracts covering a substantial portion of 2024 production, further bolster the company’s outlook and justify the analyst’s positive recommendation.
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Arcadium Lithium Plc (ALTM) Company Description:
Arcadium Lithium plc (NYSE: ALTM, ASX: LTM, ‘Arcadium Lithium’) today announced the completion of the all-stock merger of equals between Allkem and Livent. The new, combined company is a leading global lithium chemicals producer committed to safely and responsibly harnessing the power of lithium to improve people’s livesand accelerate the transition to a clean energy future. With roughly U.S.$1.9 billionof combined total revenue in 2022 and a global team of more than 2,600 employees, Arcadium Lithium is one of the largest integrated producers of lithium chemicals in the world.
Read More on ALTM:
- Arcadium Lithium Releases Fourth Quarter and Full Year 2023 Results and Provides 2024 Full Year Outlook
- Largest borrow rate increases among liquid names
- Arcadium Lithium initiated with an Underweight at Piper Sandler
- Arcadium Lithium initiated with a Neutral at JPMorgan
- Arcadium Lithium price target lowered to $10 from $12 at TD Cowen
