The Pilbara Minerals Ltd (ASX: PLS) share price has shot higher today. It's currently up by more than 6%.
This means it's now around 36% higher over the past month and has gone up 90% since the middle of June 2022.
While some of the increase in recent weeks may simply be a reversal of the declines seen earlier in the year, the company is now trading higher than it was before.
So, what could be causing the latest gains?
Brokers are still positive on the Pilbara Minerals share price
According to reporting by The Australian, the broker JP Morgan has decided that the ASX lithium share still has further upside.
The analyst Lydon Fagan from JP Morgan has upgraded the business to an outperform rating and has lifted the price target by another 17% to $4.10. A price target is where the broker thinks the share price will be trading in 12 months from the date of the rating.
A key reason for the increase in the price target is that JP Morgan has increased its long-term estimates for lithium prices because of a "steeper cost curve to incentivise low-grade Chinese supply to fill the supply-demand gap."
The broker thinks that the lithium market could be undersupplied until 2025. That means the relationship between supply and demand could favour Pilbara Minerals for a while yet.
JP Morgan has increased its long-term forecast for lithium carbonate and spodumene prices — they were increased by 20% and 25% respectively.
Electric vehicle demand is likely to grow in the longer term, but supply chain issues and a recession could hurt growth.
The price target of $4.10 implies a possible rise of around 5% over the next year from the current level.
Another positive rating
JP Morgan isn't the only broker positive on further gains for Pilbara Minerals.
Macquarie also rates the ASX lithium share as outperform. But it has a much stronger outlook for the Pilbara Minerals share price. Macquarie's price target is $5.60. This implies a possible rise of more than 40%.
The reason for Macquarie's optimism is that Pilbara Minerals is predicting that its production could increase by more than half in FY23. When combined with the high lithium price, this combination is expected to lead to a significant rise in net profit after tax (NPAT) and cash flow.
Pilbara Minerals share price snapshot
Over the last six months, the lithium miner's share price has risen by around 40%.
