Lake Resources N.L. (ASX: LKE) shares have taken a beating over the last 12 months.
As you can see on the chart below, since this time last year, the lithium developer's shares have lost over 80% of their value.
This decline has been driven by disappointment over the company's production plans and concerns over the viability of its direction lithium extraction (DLE) technology.
Image source: Getty Images
Are Lake Resources shares cheap enough now?
One leading broker that remains positive on Lake Resources is Bell Potter.
This morning, the broker has retained its speculative buy rating on Lake Resources shares but has taken an axe to its price target.
Bell Potter's new valuation gives it a price target of 36 cents, which is down a whopping 86% from $2.52 previously.
Nevertheless, with the company's shares currently fetching 24.5 cents, this still implies approximately 47% upside over the next 12 months.
What did the broker say?
Bell Potter has made some major changes to its valuation model to account for recent updates. It said:
The DFS will now review an initial 25ktpa Lithium Carbonate project (previously 50ktpa) with first production from 2027 (previously 2024) and potential for a subsequent 25ktpa phase. Capex is estimated at US$1.1-1.5b for 25ktpa (March 2021 PFS US$544m) and opex US$4,700-7,100/t (PFS US$4,178/t). Under revised (higher) price assumptions, LKE's estimate of the project's annual average EBITDA is now estimated at US$365m (PFS US$275m).
Our heavily risked and diluted LKE valuation of $0.36/sh now factors in a smaller project only (25ktpa LC) and the project's new parameters and timeline. We have conservatively ascribed no value to possible production expansions or LKE's other earlier-stage assets.
