Livent Winning Lithium Recipe: Upgraded Rating As Chinese Demand Picks Up And $10.6B Merger Boosts Outlook

KeyBanc Capital Markets analyst Aleksey Yefremov upgraded Livent Corp LTHM to Overweight from Sector Weight with a price target of $30.
The analyst is bullish on the stock following Q1 2023 earnings release last week.
Livent reported revenues of $253.5 million, above the consensus of $233.5 million, and adjusted EPS of $0.60 exceeded the analyst's expectations of $0.39.
The analyst expects lithium demand in China to improve post-November 2022 downturn and purchase orders from large buyers to resume, with inventories declining and bottoming out in the coming months.
Also, on May 10, Lithium and Allkem Ltd OROCF inked a merger agreement to create a company valued at $10.6 billion.
The companies expect run-rate operating synergies of around $125 million (pre-tax) per annum and one-time capital savings of about $200 million.
Yefremov believes Allkem assets are a strategic fit for Livent, as the deal will enable resource diversification and bring technology and project management expertise.
The analyst raised 2023 EBITDA and adjusted EPS estimates to $549.1 million (from $525.9 million, consensus: $565.5 million) and $1.97 (from $1.88, consensus: $2.00), respectively.
Price Action: LTHM shares are trading higher by 0.29% at $25.58 on the last check Thursday.