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ASX Lithium Share Pilbara Minerals May Have Hit Bottom, Says Top Broker

ASX Lithium Share Pilbara Minerals May Have Hit Bottom, Says Top Broker

Pilbara Minerals Ltd (ASX: PLS), a prominent ASX lithium stock, has endured a rough year. The share price has plummeted nearly 40% in the past 12 months. Concerns about the company’s valuation have been voiced by brokers like UBS, who believe the stock price factored in a higher lithium price than they deem achievable.

Since May 20th, 2024, Pilbara Minerals has shed close to 30% of its value, leaving investors anxious about its future. However, a glimmer of hope has emerged.

JPMorgan Upgrades Pilbara Minerals

JPMorgan analyst Al Harvey upgraded Pilbara Minerals’ rating from “underweight” to “neutral,” shifting from a sell recommendation to a hold. Their 12-month price target of $2.95 aligns with the current price, suggesting they believe the significant decline may be over.

Remember that a price target is a broker’s prediction, and the price could deviate significantly.

Analyst Opinions Divided

Analyst opinions on Pilbara Minerals are mixed. According to Factset, seven analysts recommend buying, six recommend holding, and seven recommend selling. This indicates a lack of consensus, with both bullish and bearish perspectives.

UBS on Lithium Price and Pilbara Minerals Forecast

UBS remains cautious about the lithium price, citing potential supply growth from Africa and stagnant demand for plug-in hybrid electric vehicles (PHEVs). They believe Pilbara Minerals’ forecasts anticipate a price rebound, but it might take time to reach their long-term target of US$1,400 per tonne. Increased supply could keep prices near current support levels.

For FY24, UBS forecasts Pilbara Minerals to generate $1.27 billion in revenue, $525 million in EBIT (earnings before interest and tax), and $359 million in net profit. They expect the company’s net cash to decline to $942 million due to investments in production growth.

Final Take

Investor sentiment on Pilbara Minerals (ASX: PLS) is mixed. While the share price has taken a beating, one broker upgraded their rating, suggesting a potential turnaround. However, analysts’ opinions are divided, with some recommending buying, holding, or selling—the future hinges on the lithium price, with some expecting a rebound while others see headwinds. Investors should consider all outlooks and Pilbara Minerals’ forecasts before deciding.

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