Key Morningstar Metrics for Lithium Americas
- Fair Value Estimate: C$8.00
- Morningstar Rating: ★★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: Very High
What We Thought of Lithium Americas’ Earnings
Lithium Americas’ LAC third-quarter results included continued progress on the Thacker Pass project. Management maintained its timeline for construction to be complete by the end of 2027. The shares were down slightly in early Nov. 13 trading.
Why it matters: Thacker Pass is Lithium Americas’ only resource. Because the company currently generates no revenue, maintaining its timeline and budget for Thacker Pass is key over the next couple of years.
- Each quarter that the project progresses and maintains its budget and timeline reduces project execution risk. But with a little over two years until construction is scheduled to be completed, the risk remains.
The bottom line: We maintain our fair value estimate for no-moat Lithium Americas. We view the company as fairly valued, with the stock trading about 15% below our fair value estimate but still in 3-star territory.
- Lithium Americas has an at-the-market program to issue equity if needed. As the stock trades in 3-star territory, we view equity issuances as closer to value-neutral for shareholders, versus the highly dilutive equity issuances earlier in the year when the shares were well below our fair value estimate.
- We maintain our Very High Uncertainty Rating, based on continued execution risk.
Big picture: We forecast 2025 will be the multiyear low for lithium prices, as the market is oversupplied. However, in recent months, prices have risen slightly as global demand has increased faster than supply.
- We see demand continuing to rise from global electric vehicle sales growth and the buildout of utility-scale energy storage system batteries. But due to low prices, much of the supply growth has been delayed, and some supply has exited the market. This should support higher prices in the years to come.
