The IGO Ltd (ASX: IGO) share price has been a positive performer over the last 12 months.
As you can see on the chart below, during this time, the ASX 200 lithium share has risen almost 11%.
This compares very favourably to the performance of the S&P/ASX 200 Index (ASX: XJO), which is down 0.5% over the same period.
Image source: Getty Images
Has this ASX 200 lithium share peaked?
The good news for investors is that the team at Goldman Sachs believes this ASX lithium share can still rise a bit further from here.
According to a note, the broker has responded to IGO's quarterly update by retaining its buy rating with an improved price target of $14.30.
As with most mining updates during the last quarter, its analysts were not blown away with the company's performance. They commented:
3Q23 spodumene production softened in line with GSe to 356kt down 6% QoQ driven by lower throughput attributed to a reduction in CGP1 and CGP2 run time during the quarter and mined grade fell slightly 2.59%, though remains above long run grade expectations of ~2% at Greenbushes. Sales revenue of A$2.8bn was up 23% QoQ representing higher spodumene contracted prices and favorable sales mix with high grade spodumene product. IGO expects higher spodumene sales volumes in the June quarter, following the 13% fall in shipments in the March quarter, where spodumene sales were 336kt for 3Q, 9% below GSe.
Despite this, the broker remains a fan of this ASX 200 lithium share and continues to recommend it as a buy. This is due to its attractive valuation compared to peers, its strong free cash flow generation, and the low costs of its key Greenbushes operation. It explains:
We rate IGO a Buy on: 1) Valuation: trading on ~1.0x NAV and pricing ~US$1,050/t spodumene (peer average ~1.3x NAV and ~US$1,300/t), and near-term FCF yields of c. 15-20% in FY23/24E and c. 10% in FY25/26E remain attractive vs. peers, 2) Greenbushes the lowest cost lithium asset in our coverage, 3) TLEA dividends de-risk nickel spend; Ni volumes declining, but study outcomes due this year.
