Li-Cycle cut to Market Perform at TD Cowen on lack of financing visibility

As previously reported, TD Cowen downgraded Li-Cycle to Market Perform from Outperform with a price target of $2, down from $8, after the company announced it will pause construction on its Rochester hub pending a review of the go-forward strategy for the project. While “positive” on the long term business model and need for North American recycling capacity, management’s “evasiveness on anticipated commissioning timelines and now cost overruns present an unclear liquidity profile,” even beyond receiving the proposed DOE funding, the analyst tells investors. The firm, which has pushed out expectations for closing of the $375M DOE loan to Q1 of 2024, now models an additional $100M loan being required given extended timing on generating positive cash flow.