JP Morgan: Lithium Americas (LAC.US) stock price has retraced to a reasonable level. The rating has been upgraded to "neutral".
JPMorgan Chase has upgraded its rating on Lithium Americas from "underweight" to "neutral" and set a target price of $5.
J.P. Morgan upgrades Lithium Americas (LAC.US) from "underweight" to "neutral" and sets a target price of $5. J.P. Morgan states that after the U.S. government invested in the company, its stock price experienced a significant increase followed by a sharp decline, and now seems to have returned to a reasonable level.
Analyst Bill Peterson of J.P. Morgan states that once the Thacker Pass Phase 1 project progresses smoothly and reduces risk, Lithium Americas' profitability should begin to show, and will further improve towards the end of the decade with the advancement of the Phase 2 project and the improvement of the lithium market fundamentals.
The analyst notes that he still believes the Thacker Pass project is the flagship asset in the U.S. lithium mining sector, benefiting from low-cost debt financing and a strong sales agreement with General Motors Company (GM.US). He also believes that Lithium Americas' stock price now more accurately reflects the execution risks before production starts in 2028, as well as the potential upside brought by the tightening lithium supply and demand fundamentals in the latter half of the decade.
Peterson mentions that the recent pullback of the stock is partly due to changing rhetoric from the Trump administration regarding U.S.-China relations. China has lifted export restrictions on certain key minerals, easing some political risks for GEO Group Inc. Additionally, the strength of lithium prices has been better than expected, with J.P. Morgan's metals and mining team now predicting a supply shortage in the market starting from 2025, as opposed to the previous expectation of 2029, mainly due to stronger-than-expected demand for electric vehicle energy storage systems.
Peterson suggests that until any catalyst related to project development emerges, the stock price of Lithium Americas may continue to fluctuate within a range and be somewhat tied to the underlying lithium price.
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