Lithium Americas Corp. (LAC -2.25%), which focuses its efforts on mining a key element used in moden batteries, didn't produce much of a charge on Hump Day. The company's share price fell by over 10% following an analyst's recommendation change. That rate compared most unfavorably to the 1.3% dip of the S&P 500 index on the day.
Lithium Americas earns a recommendation downgrade
The analyst in question was Corinne Blanchard of veteran financial services company Deutsche Bank (DB -1.17%). She downgraded her recommendation on Lithium Americas stock to hold; previously, she pegged it as a buy. In doing so, she drastically lowered the price target on the shares -- it's now $7 apiece, well down from the previous $25.
In her research note detailing the change, Blanchard zeroed in on the company's Thacker Pass project. This is a lithium mine located in Nevada and operated by Lithium Americas. While stating that the mine has good potential for the company, she said that execution risk for the project is "elevated," as it is currently in an early stage of development.
She also described Lithium Americas stock as "richly valued," hence the recommendation downshift.
One lithium miner recently became two
Her new take notwithstanding, Blanchard is still bullish on certain aspects of Lithium Americas. She wrote that, despite the downgrade, she and her team "continue to view it as a quality asset."
It is a smaller asset than previously. At the beginning of this month, the predecessor Lithium Americas Corp. split into two separate, publicly traded companies along geographical lines -- Lithium Americas (Argentina) (NYSE:LACC) and Lithium Americas. Blanchard's analysis covered the second entity.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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October 19, 2023 at 05:55AM
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Why Lithium Americas Corp. Dived 10% Lower on Wednesday - The Motley Fool
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