Why did the IGO share price just sink to a 52-week low?

IGO shares are on a downward trajectory. What's going on?

| More on:
A woman screams and holds her hands up in frustration.

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

The IGO Ltd (ASX: IGO) share price has continued its disappointing run on Thursday.

So much so, the battery materials producer's shares have just dropped 4% to a 52-week low of $11.56.

This latest decline means that IGO's shares are down over 20% since this time last month.

Why is the IGO share price at a 52-week low?

Investors have been selling IGO and other battery materials shares in recent weeks after lithium prices fell sharply.

Unfortunately, the team at Citi doesn't believe there's any relief in sight for companies like IGO.

A note this week reveals that its analysts have warned that lithium prices could fall a further 20% from current levels.

It is partly for this reason that the broker currently has a neutral rating on its shares.

One small positive, though, is that this recent lithium price weakness could benefit IGO in the long run. That's because the broker suspects that the weak prices could lead to a reduction in project developments and ultimately medium-term supply.

This could mean that when electric vehicle demand grows in the coming years, it will start to put pressure on the supply side of the equation.

Should you buy the dip?

One broker that sees huge upside potential in the IGO share price is lithium bull Macquarie.

Its analysts recently put an outperform rating and $18 price target on its shares. This implies over 50% upside from current levels over the next 12 months.

In addition, the broker is forecasting dividends per share of 35 cents in FY 2024 and 70 cents in FY 2025. This implies dividend yields of 3% and 6%, respectively.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

smiling worker stands before power generator technology
Materials Shares

Fortescue shares jump 5% on record performance

This mining giant was in fine form during the quarter.

Read more »

A man casually dressed looks to the side in a pensive, thoughtful manner with one hand under his chin, holding a mobile phone in his hand while thinking about something.
Materials Shares

Should you buy Pilbara Minerals shares today?

Let's see if analysts think investors should be buying the lithium giant's shares.

Read more »

Image of young successful engineer, with blueprints, notepad and digital tablet, observing the project implementation on construction site and in mine.
Materials Shares

Expert says this ASX mining stock could rise almost 30%

Let's see which miner is being tipped as a buy for investors right now.

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Materials Shares

BHP shares charge higher on record copper and iron ore production

Let's see how the miner performed during the fourth quarter.

Read more »

A man stands with hands on hips surveying construction of three high-rise buildings.
Materials Shares

Building activity on the rise – will ASX materials shares benefit?

New data from the March quarter shows a sharp rise in building activity. 

Read more »

Man smiling at a laptop because of a rising share price.
Materials Shares

Macquarie predicts 11% upside for this ASX materials stock

Here's why the broker is positive on the stock.

Read more »

Miner and company person analysing results of a mining company.
Materials Shares

Rio Tinto share price falls on Q2 update

Let's see what the mining giant reported for the second quarter.

Read more »

a man in a hard hat and high visibility vest smiles as he stands in the foreground of heavy mining equipment on a mine site.
Materials Shares

Could these 3 ASX materials shares be set to double?

This broker has buy ratings and aggressive price targets for these holdings. 

Read more »