Why Vulcan (ASX:VUL) could be a lithium share with 120% upside

Is Vulcan a lithium share to buy? This broker thinks it is…

| More on:
asx share price increase represented by golden dollar sign rocketing out from white domes of lithium

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Vulcan Energy Resources Ltd (ASX: VUL) share price could be great value according to one leading broker.

This is despite the lithium developer's shares rising 250% since the start of 2021.

Who is bullish on the Vulcan share price?

The team at Canaccord Genuity is very bullish on the Vulcan share price. In fact, it believes it could more than double in value in 2022.

According to a note from last week, the broker has retained its speculative buy rating and lifted its price target on the company's shares to $22.00. Based on the current Vulcan share price of $9.86, this implies potential upside of 120% over the next 12 months.

This price target is based on its "risked (60%) NAV, using US$15,000/t LiOH, 1.58 EURAUD, and 8% discount rate for the lithium operation."

What did the broker say?

Canaccord Genuity notes that Vulcan has agreed to acquire the Insheim geothermal plant and secured offtake rights for spent brine from the Landau geothermal plant.

It sees a lot of positives in this and notes that it means Vulcan will soon be generating revenue. It also gives it an opportunity to demonstrate its direct lithium extraction (DLE) technology.

The broker said: "In mid-December, Vulcan agreed to acquire the Insheim geothermal plant and secured offtake rights for spent brine from the Landau geothermal plant. The acquisition, which was effective 1 Jan 2022, transitions Vulcan into an operator with revenues."

"However, more importantly, it is a platform for Vulcan to demonstrate its DLE technology in a commercial operation and how geothermal reservoirs operate (Li grades, flow rates, subsurface conditions). We previously unwound some of our risking to account for the potential acquisition, but we have now modeled the operation assuming €330m to upgrade the assets, construct the DLE, and contribution to the first stage of the Central Lithium Plant (CLP)," it added.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes

Three people in a corporate office pour over a tablet, ready to invest.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »

A little boy holds his fingers to his head posing as a bull.
Broker Notes

Why this broker is bullish on these ASX 200 stocks

Ord Minnett has good things to say about these shares.

Read more »

a man with a wide, eager smile on his face holds up three fingers.
Broker Notes

3 of the best ASX shares to buy for 2025

Analysts have good things to say about these shares ahead of the new year.

Read more »

Siblings jumping on a trampoline.
Broker Notes

3 ASX small-cap stocks to buy for 2025: brokers

Here are 3 ASX small-cap shares capturing the attention of professional brokers this week.

Read more »

Three miners wearing hard hats and high vis vests take a break on site at a mine as the Fortescue share price drops in FY22
Resources Shares

3 ASX mining shares just upgraded by brokers (one with 60% upside!)

Here are 3 ASX mining shares that brokers are backing for growth in an uncertain climate.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Broker Notes

Morgans says that these ASX shares are top buys

Let's see what the broker is saying about these shares this week.

Read more »

Two brokers analysing stocks.
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these stocks.

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Broker Notes

A top fund manager says this under-the-radar ASX blue-chip stock is a buy

Here’s why investors should get excited about this stock, according to a leading fund manager.

Read more »