Although the Core Lithium Ltd (ASX: CXO) share price has been performing terribly in recent weeks, it has still smashed the market this year.
As you can see below, over the last 12 months, the lithium developer's shares are up a sizeable 88%.
This has been driven partly by excitement over the company's Finniss Lithium Project in the Northern Territory, which is expected to commence production next year.
Investors appear to be betting on this making the company the next Pilbara Minerals Ltd (ASX: PLS) success story.
Image source: Getty Images
Is Core Lithium the next Pilbara Minerals?
Goldman Sachs has been looking at Core Lithium recently and has given its verdict on the company and its shares.
Unfortunately, the broker isn't buying the Pilbara Minerals comparisons. It said:
We think it is likely that with Core's position as the next lithium producer in Australia, that many smaller investors may see similar upside to that of the meteoric rise in the PLS share price, with CXO seen as possibly the next PLS-like story.
However, […] CXO does not have the reserve/resource of the same scale or quality of PLS, comes with ramp up and execution risk of a new project which PLS had largely already overcome into the recent spodumene price rise via a longer period of operating experience (Pilgan took ~2 years to reach recoveries >70%), and has a fairly new management team now in place (though the technical expertise of its strategic partners may help overcome some of this).
And while Goldman expects its operation to commence production while lithium prices are still high, it believes Core Lithium's expansions are likely to miss this window.
As a result, it is forecasting peak earnings and cash flow in FY 2024, before a huge contraction in FY 2025. In respect to earnings, it is forecasting the following for EBITDA:
- FY 2023 $177 million
- FY 2024 $538 million
- FY 2025 $87 million
In light of this, Goldman has a sell rating and $1.00 price target on Core Lithium shares.
