The Core Lithium Ltd (ASX: CXO) share price has staged a solid rebound in the New Year.
Since the opening bell on 3 January, the ASX lithium stock is up 8.4%, currently trading for $1.10 per share.
Yet the Core Lithium share price remains down just over 41% from its 14 November all-time closing highs of $1.87 per share.
It hit that high, as you can see in the below chart, after the stock soared 183% over the first ten and a half months of 2022.
But with the soon-to-be lithium producer still down 41% since November, is it a bargain or a falling knife?
Image source: Getty Images
To buy or not to buy at the current Core Lithium share price?
A number of prominent brokers are rather bearish on the short to medium-term outlook for the Core Lithium share price.
Among them is Goldman Sachs.
On 13 January, the broker retained its sell rating on Core Lithium, with a share price target of 95 cents. That implies a 13.4% downside from the current price.
Atop forecasting a retrace in lithium prices, one of Goldman's primary concerns stems from the potential risks at the company's Finniss Lithium Project, located in the Northern Territory.
According to Goldman Sachs' analysts:
We see production risk as the Finniss project moves through ramp up on project complexity (moving between different open pits and underground configurations), and the required exploration/resource upside to support capacity expansion/life extension currently priced into the stock looks significant.
Still, the lithium miner says it's on track to commence spodumene concentrate production at Finniss in the first half of 2023.
And on 5 January, the Core Lithium share price leapt 7.8% after the company reported on its first direct shipping ore (DSO) from Finniss to an unspecified customer in China.
"This first shipment of lithium product has also allowed our team to successfully commission the logistics chain linking Finniss to the Darwin Port," Core Lithium CEO Gareth Manderson said earlier this month.
"Our focus now is to safely complete construction of the dense media separation (DMS) plant at Finniss to enable us to produce high-quality spodumene concentrate," he added.
Keep an eye on lithium demand
Barring any substantial impediments at Finniss, the outlook for the Core Lithium share price in 2023 will be heavily influenced by the price of the battery-critical mineral it produces.
According to data from Trading Economics, lithium prices are down 8% so far in the New Year.
The trend from here will be largely determined by what happens with the broader global economy.
Should inflation across the world begin to subside and central banks begin to ease off on their tightening paths, a global recession could be averted.
That should see healthy demand remain from the booming global EV manufacturers responsible for the lion's share of lithium demand. It would also likely offer some further tailwinds to the Core Lithium share price.
However, should the world's leading economies tip into recession, lithium demand (and prices) could well slip amid potentially excess supply in the short term.
Looming recession or not, taking the longer-term view, investors may well look back at the Core Lithium share price today in 2033 and proclaim it was indeed a bargain buy.
