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Livent: High Potential Despite Near-Term Headwinds

Mar. 04, 2020 3:27 PM ETLivent Corporation (LTHM) StockALB, TSLA, XOM2 Comments


  • Livent is well-positioned to take advantage of growing lithium demand.
  • Energy storage will likely be a key long-term market for Livent.
  • Livent still faces major near-term challenges in the form of depressed lithium prices and the coronavirus.

The lithium industry is facing unprecedented demand with the rise of EVs (electric vehicles) and renewables. Livent (NYSE:LTHM) is one of the few pure-play lithium producers in the growing lithium industry. The company's nearly singular focus on lithium should be highly advantageous in an increasingly high demand environment. While low lithium prices have negatively impacted produces like Livent over the past few years, this price situation should eventually normalize.

Livent's shares recently plunged as a result of lukewarm Q4 results and a lithium price warning. The company missed analyst revenue expectations of $82 million with a revenue of $78.4 million (which represents a 34.6% Y/Y decrease). The company also missed GAAP EPS expectations by 0.06 with a GAAP EPS of $0.00. Despite these lackluster results, Livent has positioned itself well for growth.

High-Growth Industries Pushing Demand

Lithium demand has skyrocketed over the past few years largely as a result of the EV industry. Tesla (TSLA) is almost single-handedly mainstreaming EVs in an industry dominated by gasoline vehicles. EVs have significantly raised the demand for lithium given lithium's utility in EV batteries. In fact, lithium batteries are one of the most important components of cost-effective EVs.

Livent has positioned itself well in the increasingly high demand lithium industry. As one of the few pure-play lithium companies in the industry, Livent has much to gain from growing lithium demand. The vertically integrated Livent also benefits from operating at low cost mineral sites at Salar del Hombre Muerto in Argentina. In fact, Salar del Hombre Muerto is one of the most important lithium sources in the world.

Salar del Hombre Muerto is one of the largest lithium sites in the world.

Source: Danita Delimont

Livent is highly experienced in producing lithium compounds vital in emerging growth industries like energy storage. The company's battery-grade lithium

This article was written by

AWS Certified Solutions Architect, AWS Certified SysOps Admin, AWS Certified Cloud PractitionerTop ~5% performer on Tipranks among all analysts and experts. https://www.tipranks.com/bloggers/simple-investment-ideas.

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Comments (2)

The CAPEX of LTHM have a strong increase in 2019, the expansion is still insufficient compare with other key player like ALB and GFL. The supply capability of LTHM might be a problem in the future IMO.
Manzanita Research profile picture
I own LTHM and LAC for the reasons stated in this article. I don't expect much upward movement this year but I also don't expect much more downside. By the time Lithium rises again I can sell my shares for long term capital gains.
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