On Thursday, Piper Sandler adjusted its stance on Arcadium Lithium PLC (NYSE:ALTM), upgrading the stock from Underweight to Neutral. The firm also revised the price target to $5.85, up from the previous target of $3.25.
The upgrade comes in response to Rio Tinto (NYSE:RIO)'s current bid to acquire 100% of the outstanding shares of Arcadium Lithium. Piper Sandler believes that there will be no additional bidders entering the fray, nor do they anticipate any increase in the offer price from Rio Tinto. The new price target set by Piper Sandler reflects the terms of Rio Tinto's proposal.
According to Piper Sandler, the gap between Arcadium Lithium's current share price and the offer price incorporates the risk premium and the time value of the takeover offer. The firm expects the acquisition process to be completed in the second quarter of 2025 or early in the third quarter.
Piper Sandler's update follows the developments in the ongoing acquisition process by Rio Tinto. The market is now provided with a revised outlook on Arcadium Lithium's stock, taking into consideration the latest offer details and expected timelines for the completion of the transaction.
In other recent news, mining giant Rio Tinto has proposed an all-cash acquisition of Arcadium Lithium, valued at approximately $6.7 billion. This development has prompted several analysts to adjust their ratings on Arcadium Lithium.
TD Cowen downgraded the stock from Buy to Hold, aligning the new price target with the proposed acquisition price of $5.85 per share. Similarly, KeyBanc revised its rating to Sector Weight, while HSBC and Raymond James moved their ratings from Buy and Outperform to Hold and Market Perform, respectively.
The acquisition proposal has also led to a revision of price targets by several firms. HSBC raised its price target for Arcadium's shares to $5.85, up from the previous target of $4.25.
Despite the rating downgrades, Arcadium Lithium has announced plans to increase its volume by nearly 20% compound annual growth rate from 2024 to 2028 without equity dilution, a move that has received mixed reactions from analysts.
While BMO Capital Markets expressed caution, TD Cowen reaffirmed its Buy rating, praising the company's strategic plans and financial performance. These are among the recent developments surrounding Arcadium Lithium, as it navigates potential acquisition, analyst reviews, and ambitious growth plans.
InvestingPro Insights
Arcadium Lithium's recent upgrade by Piper Sandler is complemented by several key insights from InvestingPro. The company's stock has shown strong performance recently, with InvestingPro data indicating a remarkable 123.89% return over the last month and a 50.27% return over the last three months. This aligns with the InvestingPro Tip that suggests a "Strong return over the last month."
Additionally, the InvestingPro Fair Value for Arcadium Lithium stands at $5.33, which is close to Piper Sandler's new price target of $5.85. This proximity to the analyst's target price lends credence to the valuation in light of Rio Tinto's acquisition bid.
It's worth noting that Arcadium Lithium operates with a moderate level of debt and its liquid assets exceed short-term obligations, according to InvestingPro Tips. These factors could be attractive to potential acquirers like Rio Tinto, as they suggest financial stability.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Arcadium Lithium, providing a deeper understanding of the company's financial health and market position.
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