Australian lithium stocks are just one deal away from a resurgence as investors face a shrinking pool of miners to invest in after Rio Tinto’s $9.9 billion takeover of Arcadium, according to E&P Financial.
The broker said Rio’s landmark deal, which capitalised on the collapse in lithium prices, could trigger a wave of institutional money into the stocks as investors speculate on the next takeover target. “Rio’s acquisition of Arcadium feels like bottom of the cycle M&A,” wrote E&P analyst Adam Martin in a report to clients.
“We are conscious that one more M&A deal in the lithium sector would ‘light up’ equities given limited options to play this thematic globally.”
While the lithium market has stabilised recently, analysts believe prices of the battery metal need to move higher to justify the valuations of lithium stocks, which have started to recover after a brutal year.
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