On Thursday, Roth/MKM initiated coverage on Stardust Power Inc. (NASDAQ:SDST) stock, giving it a positive outlook. The analyst assigned Stardust Power a Buy rating and a price target of $13.00.
The analyst's optimism is rooted in the company's potential to become a significant player in the U.S. supply chain for lithium batteries. Stardust Power is seen as a distinctive investment opportunity for those looking to gain exposure to the battery supply chain and direct lithium extraction (DLE) without investing in mineral development companies.
Stardust Power is aiming to establish itself as a lithium carbonate refiner in the United States, a move that could differentiate it from the predominantly China-based lithium refining industry. The company's strategy is to shift some of the refining capacity stateside, which is not currently integrated from resource to lithium carbonate or hydroxide.
The firm's analysis suggests that Stardust Power's unique position in the lithium production market could lead to a premium valuation, especially from Environmental, Social, and Governance (ESG)-focused investors. The analyst emphasized the company's potential to become a key component in the U.S. battery minerals landscape, which could be increasingly valuable as the demand for lithium batteries continues to grow.
In other recent news, Stardust Power Inc. has made significant strides in its lithium project and corporate restructuring. B.Riley initiated coverage on Stardust Power, expressing optimism about the company's large-scale lithium refinery project in Muskogee, Oklahoma. The firm expects the project to have strong economics and anticipates a final investment decision by mid-2025.
Stardust Power has also entered into a 90-day exclusivity agreement with KMX Technologies, Inc. to negotiate the use of a lithium brine concentration technology, expected to reduce operating costs and capital expenditures. The potential licensing arrangement could grant Stardust exclusive rights to this technology in several global jurisdictions.
Additionally, Stardust Power announced the appointment of Paramita Das as its new Chief Strategy Officer and Senior Advisor. Das brings over two decades of experience in the metals and mining industry and is expected to support Stardust Power's commercialization efforts.
In a significant corporate move, Stardust Power transitioned from WithumSmith+Brown, PC, to KNAV CPA LLP as its independent registered public accounting firm. The decision was executed without any reported disagreements on accounting principles or practices, financial statement disclosure, or auditing scope or procedure.
Finally, Stardust Power signed a $4.7 million engineering agreement with Primero USA, Inc. for the development of its Muskogee Lithium facility. Services including engineering, design, and consultancy are expected to be completed in the first half of 2025. These developments mark a period of notable change and progress for Stardust Power Inc.
InvestingPro Insights
While Roth/MKM's optimistic outlook paints a promising future for Stardust Power Inc (NASDAQ:SDST), current InvestingPro data reveals some challenges the company faces. The stock's market cap stands at $332.68 million, but it's trading near its 52-week low, having fallen significantly over the past three and six months. This decline is reflected in the stock's price, which closed at $6.94 in the most recent session.
InvestingPro Tips highlight that SDST holds more cash than debt on its balance sheet, which could provide some financial flexibility as it aims to establish itself in the U.S. lithium refining market. However, the company is not currently profitable, with a negative operating income of $12.79 million over the last twelve months.
Despite these challenges, analysts see potential upside. The fair value based on analyst targets is $15.5, significantly higher than the current trading price. This aligns with Roth/MKM's bullish stance and $13 price target.
For investors considering SDST, it's worth noting that InvestingPro offers 11 additional tips that could provide deeper insights into the company's financial health and market position. These additional tips could be particularly valuable given the company's unique position in the evolving U.S. battery minerals landscape.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.