Roar! Broker initiates coverage on Liontown shares with buy rating

This lithium share could be a high-risk, high-reward option for investors…

| More on:
A person wears a roaring lion mask.

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

Liontown Resources Ltd (ASX: LTR) shares are pushing higher in afternoon trade.

At the time of writing, the lithium developer's shares are up over 2% to $1.35.

Why are Liontown shares rising?

Investors appear to have been buying Liontown shares on Tuesday in response to the release of a broker note out of Morgans.

According to the note, the broker has initiated coverage on the lithium developer with a speculative buy rating and $1.96 price target.

Based on its current share price, this implies potential upside of 45% for investors over the next 12 months.

Though, given its speculative rating, it is a high-risk option and thus only suitable for investors with a higher tolerance for risk.

What did the broker say?

Morgans notes that the company is a near-term developer of Australian spodumene and believes there's significant potential upside for Liontown shares if it can resolve its funding issues and avoid further significant cost blowouts. It commented:

LTR is an early stage developer with spodumene assets in central and southern WA. It is currently constructing the Katherine Valley (KV) project. Planned capacity is 3Mtpa – 4Mtpa (ROM tonnes) with first production expected in mid 2024. The KV project is supported by offtake agreements with several tier one customers.

The company and its flagship project have been impacted by cost increases however and additional funding will be required to complete it. We initiate with a SPECULATIVE BUY rating with potential 12-month upside of 44% to our $1.96 price target. However, we see LTR as a higher risk opportunity than its established peers.

The broker's preferred pick in the industry remains Allkem Ltd (ASX: AKE). It has an add rating and $15.40 price target on the lithium giant's shares. It stated:

We continue to prefer AKE amongst the lithium pure plays as we see a longer growth runway for production and greater potential valuation upside.

Motley Fool contributor James Mickleboro has positions in Allkem. 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 Scott Phillips.

More on Broker Notes

two men smiling with a laptop in front of them, symbolising a rising share price.
Broker Notes

These ASX 200 shares could rise 25% to 60%

Analysts think these shares are top buys and could rise materially.

Read more »

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Broker Notes

Bell Potter says this growing ASX 200 stock can rise over 40%

Big returns could be on the cards for buyers of this stock.

Read more »

Broker written in white with a man drawing a yellow underline.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Man with rocket wings which have flames coming out of them.
Resources Shares

Up 23% today, why Macquarie forecasts this ASX 200 mining stock could rocket another 33%

Macquarie forecasts more outsized gains to come for this surging ASX 200 mining stock.

Read more »

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Bank Shares

ASX banking sector: Is it time to consider a regional bank?

The big 4 banks are widely considered to be overvalued.

Read more »

A share market analyst looks at his computer screen in front of him showing ASX share price movements
Broker Notes

'Materially undervalued': Brokers name 3 ASX shares ripe for investment

Looking for some FY26 investment inspiration?

Read more »

Happy friends at a party enjoying pizza, symbolising the Domino's share price.
Broker Notes

Buy, hold, or sell Domino's Pizza shares after shock CEO exit? Here's what the experts say

The Domino's share price has been recovering after losing a quarter of its value last Wednesday.

Read more »

Three miners looking at a tablet.
Broker Notes

Does Macquarie prefer Rio Tinto, Fortescue or BHP shares heading into 2026?

BHP, Rio Tinto, or Fortescue? Macquarie only expects one of the three ASX mining stocks to outperform.

Read more »