Down 18% in a month, is the Pilbara Minerals share price now a buy?

Brokers are throwing support behind Pilbara as a buy.

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Key points

  • Pilbara Minerals shares have been beaten down lately, now trading deep in the red this YTD
  • Brokers are still constructive however, and reckon there's a mismatch in the market's pricing versus Pilbara's intrinsic value
  • In the last 12 months, the Pilbara share price has managed to hold a 55% gain

The Pilbara Minerals Ltd (ASX: PLS) share price has been knocked about in 2022.

It currently trades 28% down this year, or 18% down this past month, both seen on the chart below. At the time of writing, Pilbara Minerals shares are at $2.31, up 3.8% for the day so far.

In broad market moves, the S&P/ASX 300 Metals and Mining Index (ASX: XMM) has wobbled lately and trades 9% down this last month.

TradingView Chart

Is the Pilbara Minerals share price a buy?

There appears to be buying support for Pilbara Minerals. The team at Ord Minnett rate it a buy, valuing the company at $4.25 apiece.

The broker is constructive on Pilbara amid recent updates on its lithium pricing and to its valuation.

It is also positive on the company's battery material exchange (BMX) auction, where Pilbara advised it has secured a bid for a spodumene concentrate cargo.

The winning bid equals a price of approximately US$7,000 per dry metric tonne (dmt), and shipment is due in late July.

Last month, Pilbara accepted a bid for US$6,586 per dmt, indicating the upward strength in pricing.

Macquarie analysts echoed Ord's sentiment and retained their buy rating on the Pilbara share price, assigning a $3.90 price target.

The Macquarie team is also impressed by Pilbara's record bid for its lithium cargo.

Moreover, it reckons investors are unfairly punishing the share, based on a downbeat view of lithium forecasts. Meanwhile, Pilbara expects prices to remain buoyant.

This mismatch could prove fruitful for the Pilbara share price if it keeps accepting higher bids at its BMX auctions.

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 no position in any of the stocks mentioned. 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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