Core Lithium Ltd (ASX: CXO) shares have been a popular option for investors looking for lithium exposure.
Unfortunately, though, with lithium prices crashing over the last 12 months, it hasn't been a successful investment.
In fact, if you had invested $10,000 into the lithium miner's shares this time last year, you would have just $1,860 left today.
Clearly, the only ones winning with Core Lithium shares have been those shorting the company.
But that was the last 12 months. What about the future? Could this decline have created a buying opportunity? Let's see.
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$10,000 invested in Core Lithium shares
I have some bad news. Unfortunately, none of the major brokers believe that its shares are in the buy zone despite losing more than 80% of their value over the last 12 months.
Goldman Sachs currently has a sell rating and 14 cents price target on its shares. This implies over 24% downside for investors from current levels, which would turn a $10,000 investment into approximately $7,600.
Its analysts believe that its shares are still overvalued despite the decline. They commented:
CXO appears relatively expensive trading at a premium on ~1.4x NAV (peer average ~0.9x) and an implied LT spodumene price of ~US$1,300/t (peer average ~US$1,070/t), with the lowest average operating FCF/t LCE on a more moderated/deferred production ramp up.
The team at Macquarie is a little more optimistic and has a neutral rating on its shares.
However, its price target of 20 cents only implies upside of 8.1% for investors. While this would turn a $10,000 investment into $10,810, the risk/reward isn't overly compelling for such a risky play.
It is also worth noting that Macquarie's price target has fallen consistently over the last 12 months from as high as $1.50 in March. So, there's no guarantee that its latest price target is where it ends.
Hopefully for the sake of its shareholders, these brokers are wrong and its shares can rocket. But in the absence of a big rebound in lithium prices in the near future, it doesn't look likely to be the case.
