ASX investors might not be used to the Pilbara Minerals Ltd (ASX: PLS) share price falling in any kind of sustained way. Sure, Pilbara has made a name for itself as one of the more volatile shares on the S&P/ASX 200 Index (ASX: XJO).
But this is a company that has given investors a return of 189% over the past year, after all. Not to mention its 515% return over the past five years.
And yet, here we are. The Pilbara share price is down more than 10% in the past month alone. It's also down more than 26% from the new all-time high of $3.89 a share that we saw back in January.
But could this rare pullback for Pilbara shares represent a buying opportunity? One analyst thinks so.
Why the Pilbara share price is a buy: analyst
Henry Jennings of Marcus Today, recently wrote a 'Stock Ideas' piece for broker NABtrade. Jennings did acknowledge Pilbara's slowing production, as well as the upcoming departure of the company's CEO. However, he also argued that renewal might not be a bad idea for Pilbara, and "fresh eyes may be a positive".
Here are some more of his arguments (with some humour thrown in):
[Pilbara] have good exposure to spot prices around 30% I understand…
The new auction pricing mechanism (known as BMX, not bandits) reminds me of the time when BHP and RIO stopped fixed price iron ore contracts with Japan and embraced the spot market. Being a current producer means that PLS can access these higher prices now. That is a huge positive. Volumes down but realised prices up.
After recent falls, the stock is now starting to look attractive and with brokers now upgrading lithium price forecasts, PLS is a buy at around 280c. Having a producer is a bedrock but it is also good to have an explorer with upside potential.
So there you have it, Jennings rates Pilbara as a buy, with a share price target of $2.80. That's not too far off of the closing price of $2.87 we saw on Friday.
At this share price, Pilbara Minerals has a market capitalisation of $8.6 billion.
