Livent Corp. is on the lithium train and it's picking up steam. This Zacks Rank #1 (Strong Buy) is expected to merge with Argentinian-based miner Allkem in Nov 2023, creating the third largest lithium producer in the world.
Livent is headquartered in Philadelphia. The company has been in business for 80 years but it was only spun off from FMC Corp. in 2018. It manufactures lithium in the US, England, India, China and Argentina.
Merger of Equals
On May 10, 2023, Livent announced it was entering into an all stock "merger of equals" with Argentina's Allkem which would value the new company at $10.6 billion.
The combined company would have revenue of $1.9 billion annually and would see operating cost synergies of $125 million per annum.
The new company will have its primary stock listing on the New York Stock Exchange (NYSE) and its corporate headquarters in North America.
After the close of the deal, Allkem shareholders will own 56% of the new company and Livent shareholders will own 44%. The deal is expected to close in Nov 2023.
Analysts Still Raising Earnings Estimates
Regardless of the upcoming merger, the analysts continue to evaluate Livent as if it's not going to happen. Deals fall apart all the time. They continue to adjust their earnings estimates until the merger actually closes.
And those adjustments are to the upside.
2 estimates have been revised higher for both 2023 and 2024 within the last month. That has pushed up the 2023 Zacks Consensus to $2.11 from $2.05 just 30 days ago. That's earnings growth of 50.7% as the company made $1.40 last year.
They're also bullish on 2024 with the Zacks Consensus rising to $2.63 from $2.55, up another 24.6%.
The company is expected to report second quarter 2023 results on Aug 3, 2023.
Shares on a Roller Coaster
It's been a wild ride in the lithium industry over the last year. Lithium prices tripled in 2022 due to demand from the EV industry but the producers added capacity and prices plunged. But lithium prices started rebounding again in April of this year, which again set off a rally in the lithium producer stocks.
Over the last year, the result has been that Livent has under performed the S&P 500, gaining 8.3% versus the SPDR ETF (SPY) at 14.8%.
Image Source: Zacks Investment Research
Livent is cheap. This Zacks Rank #1 (Strong Buy) is trading at just 12.6x forward earnings. It has a PEG ratio of only 0.4. A PEG ratio under 1.0 usually indicates a company has both value and growth. That's a rare combination.
Lithium is called "white gold" due to strong demand, the lack of supply and it's importance as a component in EV batteries.
Investors interested in a way to get in on the changeover to EVs, should keep Livent on their short list, merger or not.
Image: Shutterstock
Bull of the Day: Livent (LTHM)
Livent Corp. is on the lithium train and it's picking up steam. This Zacks Rank #1 (Strong Buy) is expected to merge with Argentinian-based miner Allkem in Nov 2023, creating the third largest lithium producer in the world.
Livent is headquartered in Philadelphia. The company has been in business for 80 years but it was only spun off from FMC Corp. in 2018. It manufactures lithium in the US, England, India, China and Argentina.
Merger of Equals
On May 10, 2023, Livent announced it was entering into an all stock "merger of equals" with Argentina's Allkem which would value the new company at $10.6 billion.
The combined company would have revenue of $1.9 billion annually and would see operating cost synergies of $125 million per annum.
The new company will have its primary stock listing on the New York Stock Exchange (NYSE) and its corporate headquarters in North America.
After the close of the deal, Allkem shareholders will own 56% of the new company and Livent shareholders will own 44%. The deal is expected to close in Nov 2023.
Analysts Still Raising Earnings Estimates
Regardless of the upcoming merger, the analysts continue to evaluate Livent as if it's not going to happen. Deals fall apart all the time. They continue to adjust their earnings estimates until the merger actually closes.
And those adjustments are to the upside.
2 estimates have been revised higher for both 2023 and 2024 within the last month. That has pushed up the 2023 Zacks Consensus to $2.11 from $2.05 just 30 days ago. That's earnings growth of 50.7% as the company made $1.40 last year.
They're also bullish on 2024 with the Zacks Consensus rising to $2.63 from $2.55, up another 24.6%.
The company is expected to report second quarter 2023 results on Aug 3, 2023.
Shares on a Roller Coaster
It's been a wild ride in the lithium industry over the last year. Lithium prices tripled in 2022 due to demand from the EV industry but the producers added capacity and prices plunged. But lithium prices started rebounding again in April of this year, which again set off a rally in the lithium producer stocks.
Over the last year, the result has been that Livent has under performed the S&P 500, gaining 8.3% versus the SPDR ETF (SPY) at 14.8%.
Image Source: Zacks Investment Research
Livent is cheap. This Zacks Rank #1 (Strong Buy) is trading at just 12.6x forward earnings. It has a PEG ratio of only 0.4. A PEG ratio under 1.0 usually indicates a company has both value and growth. That's a rare combination.
Lithium is called "white gold" due to strong demand, the lack of supply and it's importance as a component in EV batteries.
Investors interested in a way to get in on the changeover to EVs, should keep Livent on their short list, merger or not.