6. Arcadium Lithium plc (NYSE:ALTM)
Average Analyst Price Target Upside as of September 12: 67%
Number of Hedge Fund Holders: 19
Arcadium Lithium plc (NYSE:ALTM) is one of the leading companies in the lithium production sector. It was created through the merger of Allkem and Livent in January 2024. The company operates across major lithium-rich regions, including Argentina, Canada, and Western Australia. With its diversified global presence, the company is well-positioned to cater to the growing demand for lithium.
The stock was held by 19 hedge funds, at a combined value of nearly $52 million in Q2. It is one of the most promising EV battery stocks.
Arcadium Lithium’s (NYSE:ALTM) strategic operations in high-potential regions, combined with its use of diverse extraction methods such as hard-rock mining, brine extraction, and direct lithium extraction, strengthen its ability to supply critical lithium products. These include lithium hydroxide and lithium carbonate, both essential for high-performance batteries.
The company’s recent acquisition of Li-Metal’s lithium metal business supports its focus on expanding production capacity to meet the increasing demand for next-generation battery materials.
In the second quarter, Arcadium Lithium (NYSE:ALTM) realized an average pricing of $17,200 per metric ton for lithium hydroxide and carbonate, with its specialty products, such as butyllithium, fetching even higher prices. The company continues to expand its production capacity, expecting a 25% increase in combined lithium hydroxide and carbonate sales volume for both 2024 and 2025.
Cost-saving initiatives also remain an important point for Arcadium (NYSE:ALTM), as mentioned by the company management during the second quarter earnings call. Integration efforts across legacy businesses are expected to yield cost savings at the high end of the $60 million to $80 million guidance range in 2024.
Additionally, it aims to accelerate its $125 million per annum cost synergy target, previously set for 2027. By slowing down investment in four current expansion projects, the company is adjusting its capital deployment to align with market demand while reducing financial commitments by $500 million over the next 24 months. The decision keeps options open for the future growth of the company without stretching resources too thin during a time of low market prices.
Arcadium Lithium (NYSE:ALTM) has been covered by 27 analysts with a consensus moderate Buy rating. Their average price target is $4.13, which has a 67% upside to the company’s stock at current levels on September 12. The latest Buy ratings come from Kaan Peker from RBC Capital with a $3.60 price target and TD Cowen analyst David Deckelbaum with a price target of $6.00. Both of the analysts last covered the stock on September 5.
First Pacific Advisors stated the following regarding Arcadium Lithium plc (NYSE:ALTM) in its Q2 2024 investor letter:
“Arcadium Lithium plc (NYSE:ALTM) is an integrated, low-cost, well-managed lithium producer formed by the merger of Livent, which the Fund owned, and Allkem in Australia. The merger was completed at the beginning of the year and we received, and decided to hold, shares of Arcadium. The share price has declined because of volatile lithium prices that collapsed from bubbly levels at the beginning of 2023.27 Estimates for electric vehicle production are slowing and capacity got ahead of demand; the industry is now waiting for a supply response.
Arcadium is an unusual investment for us. We normally avoid the commodity and materials sectors, and have kept our position in Arcadium small. But we believe Arcadium has a unique position in an industry with a strong long-term outlook. The company has low-cost production assets, is virtually debt-free, and has considerable capacity additions planned near-term.”
