Li-Cycle: BMO Cuts Target After Negative Revenues Recorded In Q3

Li-Cycle (NYSE: LICY) recently reported its third-quarter financial results. The company reported revenues of -$2 million; this was due to an “unfavorable non-cash fair market value (FMV) pricing adjustment of $(7.3) million relating to prior-period black mass sales.” This made the company’s product sale segment come in at -$2.34 million, and recycling service revenues came in at $0.373 million.

Operating expenses for the quarter were $32.5 million, of this, share-based compensation was $4 million, and salaries and benefits came in at $9.5 million. Professional fees came in at $4.2 million. This brought the company’s net income to -$27.5 million, or earnings per share of -$0.16.

The company ended the quarter with $649 million of cash on hand and about $285 million in long-term convertible debt. The company said that it continues to evaluate multiple capital sources, such as debt and funding from potential strategic partners.

Li-Cycle currently has eight analysts covering the stock with an average 12-month price target of US$10.13, or an upside of 61%. Out of the eight analysts, two have strong buy ratings, four have buy ratings and the last two analysts have hold ratings. The street high price target sits at US$13 and represents an upside of 107%.

In BMO Capital Markets’ note on the results, they reiterated their outperform rating but cut their 12-month price target to $10 from $12, saying that they acknowledge that the stock could trade sideways until the Rochester Hub-plant completion which is expected to be around the end of 2023, and expects there to be more growing pains ahead.

Even with that, BMO writes, “Li-Cycle is still a well-capitalized first-mover as a Western battery recycler; is well positioned to benefit from various government led OpEx/funding assistance programs to be deployed over the near-term; and is backstopped by further moat support given its Tier-1 partners.”

As a result of the earnings, BMO has reset its expectations on earnings going forward. They now expect EBITDA to be $225 million in 2025 with an EBITDA margin of 44%. Additionally, with the Rochester Hub expected to be done by late 2023, they expect a company de-risking to happen during 2024.

As a result of this, BMO now expects that the Hub-2 start-up will happen roughly 2 to 3 years after the Richester Hub is completed. Additionally, they expect Li-Cycle to get a 10% OpEx subsidy to their US recycling plants. Subsidies will primarily be for processing costs and not battery metal feedstock.

Below you can see BMO Capital Markets’ updated estimates on Li-Cycle.


Information for this briefing was found via Edgar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

2026 Could Be Gold’s Biggest Year Yet!? | Ryan King – Equinox Gold

Gold Is Screaming Higher While Currencies Burn | Simon Ridgway – Rackla Metals

We Have the Highest-Grade Antimony Deposit in North America!? | Jim Atkinson -Antimony Resources

Recommended

Canadian Copper Secures $8 Million Lead Order From Ocean Partners As Part Of Larger Funding Round

Northern Superior Expands Philibert With 350 Metre Step Out Testing 1.10 g/t Gold Over 25.5 Metres

Related News

Galaxy Digital: BMO Gives Price Target Slight Positive Bump After Strong Q3 Results

On November 15th, Galaxy Digital Holdings Ltd. (TSX: GLXY) reported its third quarter financial results....

Thursday, November 25, 2021, 04:27:00 PM

Starbucks: Analysts Raise Targets Following Q2 Results

Starbucks (NASDAQ: SBUX) opened 3% lower on the 28th before rallying on Thursday’s trading day...

Sunday, May 2, 2021, 01:18:00 PM

Valens: Haywood Reiterates Price Target, Raises Estimates

On June 1st, The Valens Company (TSX: VLNS) announced that they closed their C$40 million...

Sunday, June 6, 2021, 01:38:00 PM

Vizsla Silver: Canaccord Initiates With $4.00 Price Target

Vizsla Silver (TSXV: VZLA) got its second analyst coverage by an investment bank last week,...

Monday, June 21, 2021, 11:33:00 AM

New Gold: BMO Cuts Price Target Significantly After Guidance Revisions

On Monday New Gold (TSX: NGD) reported its second quarter production results. The company produced...

Wednesday, July 13, 2022, 12:24:00 PM