Our target price of 25 €/share is based on the average of our DCF-based SoTP NPV valuation and our EV/EBITDA valuation. 

The NPV approach provides a longer-term view of normalised returns. We calculate the DCF-based enterprise value using a WACC of 10.0% and terminal growth rate of 1%. Thereafter, we reduce the EV by the end-2024 net debt and minorities to arrive at the NPV. 

We apply a multiple of 6x to our forecast EBITDA (average of 2025-26E), a slight dicount to stock's long-term average multiple, which we believe is consistent with Citi commodity team's outlook for lithium complex prices over the medium-term.

We identify the following risks to our investment thesis and achievement of our target price:

A delay in the execution of lithium projects resulting in higher costs could adversely impact our earnings as well as valuation forecasts for the stock.

Commodity prices – lithium, tantalum, vanadium, silicon and graphite are key commodities where changes in prices could impact earnings. 

Cost inflation – higher than expected increases in raw material prices or labour cost inflation could adversely impact our earnings forecasts.

Regulatory/geopolitical risks –  the majority of AMG's asset portfolio is in OECD countries with Europe and the US being two key geographies. However, potential changes in regulatory regimes concerning its operations could expose the company to several risks.