IGO's (ASX:IGO) structural issues and weak performance at its key Greenbushes asset are limiting shareholder exposure to upside despite a strong lithium market, Jefferies said in a note on Monday.

The company reduced the fiscal 2026 spodumene production guidance from the Greenbushes lithium mine in Western Australia to 1.38 million tonnes to 1.43 million tonnes, reflecting performance year-to-date and CGP3 ramp-up expectations for the June quarter. Jefferies had expected Greenbushes 2026 production of 1.5 million tonnes.

It also lowered capital expenditure outlook for the operation to AU$400 million to AU$450 million from AU$575 million to AU$675 million, compared with Jefferies' projection of AU$565 million.

The company's Kwinana asset remains economically challenged and a large shutdown in April and May is to impact its June quarter output, the investment firm added.

Jefferies reaffirmed a hold rating on IGO and cut its price target to AU$7 from AU$8.