Shares of Lithium Americas Corp. (LAC) plunged over 6% on Tuesday, following a neutral rating from BMO Capital Markets. The investment bank resumed coverage on the lithium mining company with a "Market Perform" rating and a price target of $3.50.
While the $3.50 price target implies some upside potential from LAC's current trading levels, the neutral outlook appears to have disappointed investors. BMO Capital's analyst Andrew Quail cited risks around the development of LAC's Thacker Pass project in Nevada, as well as uncertainty around lithium prices in the coming years.
Despite highlighting LAC's attractive growth prospects and leverage to rising lithium demand from the electric vehicle industry, the cautious stance from the analyst report seems to have weighed on investor sentiment. The company's projects in Argentina and Nevada position it well to capitalize on the global shift towards clean energy and energy storage, but concerns over execution risks and lithium price volatility have raised doubts among some investors.
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