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Down 12% in June, is the IGO share price a buy?

There’s balancing factors on both sides of the IGO investment debate.
The post Down 12% in June, is the IGO share price a buy? appeared first on The Motley Fool Australia. –

Shares of diversified miner IGO Ltd (ASX: IGO) have crept 3.68% lower today and now rest at $11.27 apiece.

After whipsawing in a wide trading range these past six months, the IGO share price has seen a drawdown of 25% from its closing high in April.

In broad market moves, the S&P/ASX 300 Metals and Mining Index (ASX: XMM) has slipped 2% into the red today.

Is the IGO share price a buy?

Analysts at JP Morgan reiterated their overweight rating on the IGO share price following the battery metals miner’s most recent earnings:

We continue to like the stock from an investment point of view, based on a high production growth outlook, exposure to extremely tight lithium markets, the [free cash flow] FCF outlook (approximately 20% FCF yield) and an attractive valuation (P/NPV 0.72x;FY23E EV/EBITDA3.5x).

That sentiment is echoed by many other analysts covering the company, with more than 64% of brokers saying IGO is a buy right now, according to Bloomberg data.

In contrast, there’s just 21% rating it a hold, while the remaining 14% urge their clients to sell. Two of these IGO bears are Morgan Stanley and Ord Minnett.

With that distribution in mind, the consensus price target is $13.15 per share for IGO, suggesting around 17% return potential should the bull thesis play out.

Those at Macquarie are equally as constructive on the lithium industry after the sector saw a ripple from a bearish note out of Goldman Sachs last week.

Macquarie notes there’s still plenty of legs for the sector to run, and it also rates IGO as a buy on that basis.

IGO also has an estimated forward price-to-earnings (P/E) ratio of 6.9x per Bloomberg data, a roughly 21% discount to its GICS Industry’s average of 8.7x. The question is if IGO is undervalued, however, the market will ultimately decide this moving forward.

In the last 12 months, the IGO share price has clipped a 52% gain despite sinking 5% into the red this year to date.

The post Down 12% in June, is the IGO share price a buy? appeared first on The Motley Fool Australia.

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More reading

Is it too late to buy ASX lithium shares?
Here’s why the IGO share price is making headlines on Wednesday
Why Macquarie still sees ‘material upside’ for ASX lithium shares
Is the ASX about to wave goodbye to this billion-dollar nickel miner?
Why is the Galileo share price soaring 9% on Tuesday?

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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