SQM - Sigma Lithium: Waiting Out The Bottom

2024-07-08 07:47:21 ET

Summary

• Sigma Lithium is delivering on production, margins, and cash flow despite low lithium prices.
• Problem: Consensus estimates may be overly optimistic and call for lithium prices to double to reach a price target of US$26.
• The stock price seems expensive on conservative lithium price estimates that I value at US$10.5 YE25.
• Nonetheless, as a low cost producer in a friendly jurisdiction, it is an attractive asset for Chinese auto, battery or lithium producers.
• I rate Sigma Lithium stock a Hold and worth the wait for potential market recuperation or M&A.

Introduction

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