The last 12 months have not been kind to Core Lithium Ltd (ASX: CXO) shares.
During this time, the lithium miner's shares have crashed 85% into the red. This means that a $10,000 investment a year ago would be worth just $1,500 today.
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Why have Core Lithium shares been hammered?
Unfortunately, this decline isn't overly surprising. For a long time, I warned that its shares were screening as severely overvalued compared to peers and that lithium prices could fall sharply.
Things have got so bad since then that the company has suspended its lithium mining activities and will be effectively running on its cash reserves from now on.
But every dog has its day. Have Core Lithium shares now fallen enough to make it good value? Let's take a look at what analysts are saying about the lithium stock.
What are analysts saying?
Due to its fall from grace, there aren't that many analysts covering the company anymore. And those that are, are feeling lukewarm at best.
For example, Ord Minnett currently has a sell rating and 9 cents price target on its shares. This is largely in line with where they trade today.
Elsewhere, Goldman Sachs has a neutral rating and 8 cents price target, which implies potential downside of 13% from current levels. It commented:
While we still expect developers to underperform ramped up producers into the declining lithium price environment, we upgrade CXO to Neutral on valuation, with ongoing production restart risk now more priced in at 1.1x NAV (peers 0.8-1.0x NAV) or pricing ~US$1,170/t LT spodumene, and ~40% of CXO's market cap now in cash on hand (with no debt) potentially partially mitigating exposure to falling lithium prices. Since we added CXO to the Sell list on 20 Nov 2023, the CXO share price has fallen ~76%, underperforming ASX lithium peers and spodumene/ carbonate/ hydroxide prices down 15-30% over the same period, with the ASX 200 up +11%.
And finally, according to The Bull, Peter Day from Sequoia Wealth Management thinks that Core Lithium shares are a hold at present.
Day appears to believe that investors should keep their powder dry until market conditions improve. He said:
HOLD – Core Lithium (CXO) Finniss operations have been temporarily suspended in response to a sharp decline in the price of spodumene concentrate. The company shipped a record 33,027 dry metric tonnes of spodumene concentrate in the June quarter. The company is debt free with a cash balance of $87.6 million at June 30, 2024. CXO has exploration options for other commodities. The company's financial position enables it to re-set the business and resume Finniss operations when market conditions improve.
