Published On: January 29th, 2024
Pilbara Minerals takes the headlines as stocks plummet to record lows and shows potential strong upsurge driven by continued lithium production and market capitalization.
Figure 1-Pilbara Minerals Pilgangoora Lithium Mine
Pilbara Minerals (ASX:PLS) Generates New Investor Interest as Stock Prices Show Signs of Long-Term Recuperation
Pilbara Minerals (ASX:PLS) is one of the largest names in the Australian mining industry and has maintained strong interests from investors over the years for their steady and dividend-friendly stock performances.
But upcoming forecasts show a potential slump in sales and earnings due to multiple factors including a fluctuating global demand of battery-grade lithium.
However, despite detrimental business conditions, Pilbara Minerals stock is expected to maintain its intrinsic value and hit price targets for what might be the silver lining based on current conditions.
Pilbara Minerals: About the Company
Pilbara Minerals Limited ASX PLS is an Australian mining company currently limited to the minerals lithium and tantalum.
The core asset of the company is its 100% ownership of the world’s largest, independent hard-rock lithium mine and operations, located in Pilgangoora, Pilbara, Western Australia.
Pilbara Minerals is the leading supplier of spodumene (lithium) and tantalite concentrates, key raw materials for lithium-ion batteries. The company maintains partnerships with leading global brands including Ganteng Lithium, General Lithium, CATL, among others.
Pilbara Minerals ASX Stock News
Analyst forecasts are predicting a difficult slump in revenue sales, and therefore earnings, over the next 12 months drawing from an unstable lithium market, unsure global demand for EVs and Li-ion batteries, and the company’s operational cycle as well.
The hardest decline is in the potential earnings-per-share (EPS), forecasted at AUD 0.17, previously forecasted at AUD 0.22.
Yet, despite the huge dips, analysts continue to maintain the core share value, sticking to their $3.78 forecasts. This is strong positive to carry forward, is well-founded on the base value of Pilbara Minerals and its intrinsic position as a leading global lithium producer. Lithium will continue to be a key mineral driving the global EV and Li-ion evolution.
Pilbara Minerals stock price is considered as above fair value based on future prices. This has helped the company deliver higher Price-to-Earnings ratio (PE) than its peers. Both these primary indicators for company valuation, PE and EPS are well-balanced to stabilize Pilbara Minerals for the upcoming year, but that’s on a knife’s edge considering the huge decrease in potential sales and revenue.
Lithium Market Overview
Lithium prices are expected to continue generating strong interest in price growth and may even reach all-time-high prices this year driven by multiple factors including –
- Demand exceeding supply of lithium and lithium-carbonate.
- Major Lithium producing countries like Chile and Argentina undergoing political and social instability leading to tighter lithium supply.
- Continued market expansion of EVs and other Li-ion driven technologies creating even more demand.
However, the market is also expecting new Lithium-Iron-Phosphate (LFP) batteries, requiring less Lithium, and delivering on longer lifespan. This will balance the lagging supply for Lithium and stabilize the market but also may cause further instability and a potential dip in Lithium prices. Adding to this are new Lithium production mines coming online and potentially initiating production as well.
Pilbara Minerals Stock: Investor Outlook
While investors can consider Pilbara Minerals a difficult prospect to consider for investment, with analysts pitting a 15% average diversion of the expected share price sticking to AUD 3.78, the prospects will persist.
For a high-performing asset over the last few years to face a 50%+ slump in sales and revenue, expectations of maintaining a stable share price despite it all still makes Pilbara Minerals Limited ASX PLS a positive long-term investment. If Lithium prices recover and stabilize, ASX PLS may be the dark horse of the Australian mining stocks over the next 12, 24 and 36 months.
