The shares of ASX mining companies Liontown Resources (AU:LTR) and Pilbara Minerals (AU:PLS) have gained strong interest from investors following the lithium success story. Recently, both of these stocks soared on a rejected takeover offer for Liontown from an international company.
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The news pushed investors’ confidence high in this sector, with shares of all major players jumping. The deal also emphasizes the quality of the assets in Australia’s lithium mining sector.
Here, we have used the TipRanks Top Australian Basic Materials Stocks tool to get the necessary details on these lithium shares. This tool is an easy way to screen the stocks from any particular sector and compare them on various factors.
Let’s have a look at the details.
Liontown Resources Limited
Liontown is an Australian mining company focused on developing battery minerals for the EV market.
Yesterday, the LTR stock price shot up by more than 65% after it received an acquisition offer from the U.S.-based chemicals company Albemarle Corporation (NYSE:ALB). The deal, which was valued at AU$5.2 billion, was rejected by Liontown as the board believes it was undervalued. This was Albemarle’s third attempt to acquire the company.
Analyst Stuart Howe from Bell Potter believes the stock soared on the potential takeover but could continue to rise from here. Howe has termed the offer from Albemarle “reasonable but not full,” and he believes that the company is much more valuable than the current offer.
Howe has a Buy rating on the LTR stock at a price target of AU$2.81, suggesting an upside of 10%.
Is Liontown Resources a Good Investment?
According to TipRanks’ analyst consensus, LTR stock has a Strong Buy rating, based on six Buy and two Hold recommendations.
The average target price is AU$2.14, which is 16% lower than the current level.
Pilbara Minerals Limited
Based in Australia, Pilbara is a leading mining company engaged in lithium and tantalite.
Due to the rejected deal by Liontown, Pilbara’s stock also got some action and gained almost 15% over the last five days. However, in the last six months, the stock has been trading down by more than 20%. This was mainly due to the ongoing volatility in lithium prices.
Analysts believe the higher expected demand for lithium from China will again push lithium prices higher.
Citigroup Analyst Kate McCutcheon sees Pilbara as “most leveraged” to higher lithium prices. McCutcheon has a price target of AU$4.8 on PLS stock, which implies an upside of 35% on the current price level.
Is Pilbara a Good Stock to Buy?
PLS stock has a Moderate Buy rating on TipRanks based on a total of 12 recommendations.
The average target price of AU$5.07 represents a growth of 42% on the current trading price.
Ending Notes
Being blessed with the largest lithium reserves in the world, Australia’s mining sector is an attractive option for investors looking to diversify their portfolios.
After a solid run in the last three years, growth has slowed down across the lithium sector due to falling prices. However, with the faster-than-ever transition towards cleaner energy technologies and the EV market, the demand for lithium will drive earnings for these miners.
Both LTR and PLS have Buy ratings from analysts. Liontown’s share upside is limited. Pilbara, on the other hand, has more than 40% forecasted growth for its stock.
