The company has indicated that the average price of lithium carbonate sales for the December quarter is likely to be around US$5400/t.

This highlights for Morgan Stanley the deteriorating pricing of unpurified product, as Orocobre's production in the current half-year was expected to have around 90% unpurified product.

Although prices for purified product have stabilised somewhat, the introductory overhang continues to weigh on volumes and prices in the market, the broker observes.

Morgan Stanley agrees with the company's strategy of maintaining market share, as the loss of economies of scale could put further pressure on margins.

Equal-weight rating, $2.80 target and Attractive industry view maintained.

Sector: Materials.

Target price is $2.80.Current Price is $2.42. Difference: $0.38 - (brackets indicate current price is over target). If ORE meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

© 2019 Acquisdata Pty Ltd., source FN Arena