Liontown Resources Ltd (ASX: LTR) shares are starting the week deep in the red.

In afternoon trade, the lithium miner's shares are down 5% to 67 cents.

This means that they have now lost a third of their value since this time last year.

Is this a buying opportunity for investors? Let's see what analysts at Macquarie Group Ltd (ASX: MQG) are saying about the owner and operator of the Kathleen Valley Lithium Project.

Are Liontown shares good value?

Firstly, the broker has been looking at lithium prices and unfortunately notes that they remain subdued. It said:

The lithium market remains subdued with key prices down YTD. China Spodumene Li2O 6% and Asia lithium hydroxide fell 23% and 8%, respectively. China lithium carbonate and hydroxide dropped 19% and 13%.

The bad news is that despite this, lithium supply continues to grow, which is making it hard for lithium prices to stage any sort of recovery. The broker adds:

Lithium supply not slowing down: While multiple lithium refineries in China are undergoing planned maintenance, lepidolite production and spodumene imports remain robust.

But it doesn't believe things will stay this way forever, which is how the market is valuing lithium shares like Pilbara Minerals Ltd (ASX: PLS) and Liontown. Macquarie highlights:

Miners are trading with implied lithium price close to US$1,000/t (LT, perpetuity). PLS has the lowest implied spodumene price at US$925/t while LTR is trading with the highest implied lithium price at US$1,225/t. Both IGO and SYA are trading at ~US$1,000/t implied spodumene price (SC6%).

While the broker expects lithium prices to remain subdued in FY 2026, it is forecasting a recovery in 2027 through to 2030. In fact, by the end of the decade, Macquarie expects the spodumene 6% price to be up at US$1,750 per tonne.

In light of this, it thinks the market is undervaluing Pilbara Minerals shares and has an outperform rating and $2.40 price target on its shares.

For Liontown Resources shares, the broker is sitting on the fence with a neutral rating and 65 cents price target. This is largely in line with where its shares trade today. It adds:

Funding assumptions to develop both the Kathleen Valley Spodumene and Lithium Hydroxide projects are the key risks to our base case. Movements in spodumene and lithium prices that vary compared to our forecasts present risks (both upside and downside) to our earnings estimates and valuation for LTR. Geotechnical management of mining hard-rock pegmatites underground, variations in our capital and operating cost assumptions as well as the ramp-up profile of both the open pit and underground mines also present risks for LTR.