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On Monday, Goldman Sachs analysts downgraded L&F Co Ltd (066970:KS) stock rating from Neutral to Sell, while significantly reducing the price target to KRW40,000 from KRW80,000. The decision reflects revised earnings expectations and concerns over the company’s market position.
The analysts cited several challenges affecting L&F’s performance, including lower shipments and reduced operating margins. They revised their EBITDA estimates for 2026 and 2027 downward by 78% and 48%, respectively. This adjustment is attributed to delayed battery production from new clients such as Tesla (NASDAQ:TSLA) and Northvolt, and diversification efforts by L&F’s largest customer, LG Energy Solution, towards other suppliers like Posco FM and LG Chem.
L&F has been underperforming in plant utilization rates compared to its cathode peers since 2024. The analysts expect the company’s market share growth to remain limited due to the commoditization of existing cathode products and a lack of new customer acquisitions and differentiated product pipelines.
The assessment also highlighted concerns regarding L&F’s balance sheet, which appears stretched compared to its peers. The valuation was described as unattractive, with a 25% downside potential in their updated base case scenario. This contrasts with a 16% downside potential for their overall Korea batteries coverage.
The updated price target and rating downgrade underscore the challenges facing L&F as it navigates a competitive and evolving market landscape.
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