Why Macquarie sees 18% upside in the Pilbara Minerals (ASX:PLS) share price

This lithium miner could still be going higher from here…

| More on:
asx share price increase represented by golden dollar sign rocketing out from white domes of lithium

Image source: Getty Images

The Pilbara Minerals Ltd (ASX: PLS) share price may be trading lower on Friday but that looks unlikely to stop it from recording a strong weekly gain.

If the lithium miner’s shares end the week at $2.28, it will mean a weekly gain of 11%.

Incredibly, this will also mean Pilbara Minerals’ shares are up 160% since the start of the year.

Where next for the Pilbara Minerals share price?

Although the Pilbara Minerals share price has more than doubled in value this year, one leading broker still believes it can go higher.

According to a note out of Macquarie Group Ltd (ASX: MQG) from earlier this week, the broker has retained its outperform rating and $2.70 price target.

Based on where Pilbara Minerals shares trade currently, this suggests that they can climb a further 18% over the next 12 months.

What did the broker say?

Macquarie is bullish on Pilbara Minerals due to its very positive view on the outlook for lithium.

The latter was bolstered further this week when the company released the results of its second Battery Material Exchange (BMX) auction.

According to the release, the company intends to accept the highest bid of US$2,240/dmt for the intended 8,000dmt of cargo. On a pro rata lithia basis and inclusive of freight costs, this is approximately equivalent to a price of US$2,500/dmt (SC6.0, CIF China basis).

This was significantly higher than what Macquarie was expecting. Which it believes indicates that the positive price momentum in the lithium market is likely to continue.

As a result, the broker appears happy with its earnings forecasts, which are significantly higher than consensus estimates, backing up its price target on the Pilbara Minerals share price.

Overall, its analysts believe the company’s shares are good value at the current level.

Should you invest $1,000 in Pilbara Minerals right now?

Before you consider Pilbara Minerals, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Pilbara Minerals wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes