Can the Pilbara Minerals share price recover from a 28% loss this year?

Investors are still evaluating the sector’s outlook.

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Key points

  • Pilbara Minerals shares are falling 4% on Thursday
  • The stock is down almost 28% this year to date, and the question then becomes if it can recover from the drawdown since January
  • The Pilbara Minerals share price has still held onto a 70% gain over the past 12 months

The Pilbara Minerals Ltd (ASX: PLS) share price has nosedived in the last few weeks and is currently sinking 4.55% today to a six-month low of $2.31. It is now down 27.81% this year to date.

Lithium stocks were hammered last week following a bearish note from Goldman Sachs on the outlook for battery metals’ demand and the electric vehicle (EV) space. It declared “the battery metals bull market is over”.

Those at Goldman forecasted a 2023 lithium price of US$16,372 per tonne, a huge plunge from the US$70,994/tonne lithium carbonate currently trades at.

Downgrade felt for Pilbara Minerals share price

While the Pilbara Minerals share price fell, it wasn’t alone. Numerous lithium players realised a segment-wide sell-off that resulted in heavy losses for miners and others positioned along the value chain.

Nevertheless, investors were quick to price in the revised outlook from Goldman.

Analysts at Credit Suisse followed suit, noting lithium prices could peak “[within] the next few months” amid shifting demand-supply mechanics.

The JP Morgan team were on the opposite side of the coin just a week earlier in its examination of the lithium sector.

“We remain positive on the lithium market with an expected near-term deficit that should be supportive of prices,” it wrote in a note to clients.

Pilbara fires back

Meanwhile, incoming Pilbara CEO Dale Henderson said that “it’s a fairly bold call to say the peak has occurred, and the downhill trend will start within this calendar year,” reported The Australian Financial Review.

Instead, Henderson said the outlook was in fact “very positive”, adding that “in Goldman’s report they support strong demand, but that strong supply is coming on foot”.

“Of course that supply is coming, the question is when[?]”

Nevertheless, the downward revision was enough to spell a downgrade from Credit Suisse to neutral. However, Barrenjoey Markets upped its rating to neutral last week.

That’s supported by Macquarie, and around 50% of other analysts saying the Pilbara Minerals share price is a buy right now, according to Bloomberg data. The remainder say it’s a hold.

Despite recent turbulence, the Pilbara Minerals share price has held onto a 70% gain these past 12 months.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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