Liontown Resources Ltd (ASX: LTR) shares avoided the market weakness last month.
In fact, the lithium developer's shares managed to surge 6% despite the market dropping 3% over the period.
Why did Liontown shares outperform?
There were a couple of key reasons why the Kathleen Valley Lithium Project owner's shares smashed the market.
One was the release of a positive quarterly update at the end of the month. That update revealed that the project remains on time and budget.
As a result, the company is expecting to produce its first lithium in the middle of this year. And with the project still on budget, management reiterated its belief that it has enough funds to see it through to positive free cash flow.
Liontown's Managing Director, Tony Ottaviano, described the progress the company is making as "tremendous". He said:
The March Quarter saw tremendous progress across all major work fronts at Kathleen Valley, with construction of the process plant, the critical path to first production, being 90 percent complete on an earned value basis. We remain confident in our ability to deliver our Tier-1 lithium project on budget and schedule to first production by mid-2024.
What else?
Also potentially helping Liontown shares outperform last month was that some analysts believe that its shares are dirt cheap.
For example, a recent broker note out of Bell Potter reveals that its analysts remain as bullish as ever and believe the company's shares are undervalued at current levels.
The broker currently has a speculative buy rating and a $1.85 price target on them. This implies a potential upside of approximately 48% from current levels.
This means that a $10,000 investment would turn into almost $15,000 in 12 months if Bell Potter's recommendation proves accurate. Though, it is worth remembering that its speculative buy rating means it is a high-risk option.
Commenting on the company, Bell Potter said:
LTR's 100% owned KV lithium project remains highly strategic in terms of its stage of development, long mine life and location. LTR has offtake contracts with top tier EV and battery OEMs (Ford, LG Energy Solution and Tesla). Hancock Prospecting has a 19.9% interest in LTR. Under our modelled assumptions which includes the drawdown of the $550m debt package and repayment of Ford debt, and under a more conservative spot price scenario, we expect that LTR is fully funded to free cash flow. LTR is an asset development company; our Speculative risk rating recognises this higher level of risk.
Overall, this could make Liontown shares worth considering if you're looking for lithium exposure and have a high tolerance for risk.
