Heiko Ihle, an analyst from H.C. Wainwright, reiterated the Buy rating on Largo Resources (LGO – Research Report). The associated price target is $4.60.
Heiko Ihle has given his Buy rating due to a combination of factors including Largo Resources’ strong average sales price for vanadium, their efforts toward increased efficiency, and the successful validation of a significant clean energy technology milestone. Despite facing challenges with lower vanadium prices and inflationary pressures in 2023, the company maintained a robust sales price and took strides in operational cost management. The reduction of general and administrative expenses and technology start-up costs suggests a strategic refocusing and cost-saving measures that could benefit the company’s financial health in the longer term.
Furthermore, the advancement of Largo Clean Energy, particularly the successful operation test of a large-scale vanadium redox flow battery, signifies potential growth in a new market segment. Ihle’s reassessment of the company’s valuation factors in updated long-term vanadium price projections and a detailed breakdown of projected cash costs. Although the price target has been adjusted, the underlying discounted cash flow valuation of the Maracás Menchen Mine remains unchanged, and the company’s cash balance and adjusted valuation of Largo Clean Energy contribute positively to the overall model. This comprehensive evaluation supports Ihle’s continued endorsement of the stock with a Buy rating.
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Largo Resources (LGO) Company Description:
Largo Resources Ltd. engages in the exploration and development of vanadium and tungsten projects in Brazil and Canada. It focuses in the production of vanadium flake, purity vanadium flake and purity vanadium powder. The firm also holds interest in the maracás vanadium, currais novos tungsten tailings and campo alegre de lourdes iron-vanadium projects; and in northern dancer tungsten-molybdenum property located in the Yukon Territory. The company was founded on April 18, 1988 and is headquartered in Toronto, Canada.
