Al Root

Sometimes it is time to take profits in hot stocks. That is what J.P. Morgan is recommending investors in Lithium Americas do now.

Thursday, J.P. Morgan analyst Bill Peterson downgraded shares of the lithium miner to Sell from Hold. His price target for shares is $5, while the stock closed at $9.44 on Wednesday, so the call implies almost 50% downside.

Shares were down 11% at $8.39 in early trading, while the S&P 500 and Dow Jones Industrial Average were up 0.4% and 0.2%, respectively.

The downgrade comes after the stock rallied almost 200% over the month through Wednesday's close. Shares took off because China recently threatened export restrictions on rare-earth minerals and lithium-ion batteries as trade tensions with the U.S. ratcheted higher.

China dominates rare-earth minerals, which end up in everything from electric vehicles to fighter jets, and lithium-ion battery production. The federal government has responded by taking a stake in Lithium Americas days ago, sending shares higher.

Lithium Americas doesn't generate significant sales yet. It is developing the Thacker Pass lithium project in Nevada.

The government's investment isn't enough to justify valuing shares at a higher multiple, wrote Peterson. That and the 200% rally are the main reasons for the downgrade.

Overall, 13% of analysts covering the stock rate the shares at Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. Including J.P. Morgan's call, 23% of analysts covering Lithium Americas stock rate the shares at Sell. The average Sell-rating ratio for S&P 500 stocks is closer to 10%.

The average analyst price target for Lithium Americas stock is about $6, below recent levels. Wall Street has had trouble keeping up.

Write to Al Root at allen.root@dowjones.com

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October 16, 2025 09:55 ET (13:55 GMT)

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