The Pilbara Minerals Ltd (ASX: PLS) share price has been a very strong performer over the last 12 months.
As you can see below, since this time last year, the lithium miner's shares have risen almost 70%.
This compares very favourably to the performance of ASX 200 index, which is down 1% over the same period.
Where next for the Pilbara Minerals share price?
Unfortunately, the team at Morgans appears to believe that the Pilbara Minerals share price is close to peaking.
According to a note, the broker has initiated coverage on the company with a hold rating and $4.70 price target.
Based on the current Pilbara Minerals share price of $4.55, this implies modest upside of 3.2% for investors.
What did the broker say?
Morgans believes that the aforementioned strong gains that have been recorded over the last 12 months has left the company's shares trading at a level that doesn't provide a sufficient risk/reward. Particularly given the volatility of the sector. The broker said:
We initiate coverage with a HOLD rating. We see some upside but not enough to outweigh the volatility of the sector.
In addition, its analysts appear to agree with Goldman Sachs' view that lithium prices could pullback in FY 2024. This is due to increasing production and a number of macroeconomic risks. The broker explained:
Our view is that lithium prices can remain strong into CY23 as the company pursues volume growth but the risk of a commodity pullback will grow in FY24.
We note there are short and medium term issues that could interrupt the incredibly strong growth period the sector has seen, particularly in the last 12 months. Chinese EV sales typically have a seasonal low between December and February reducing lithium demand. A significant volume of committed supply growth is coming in CY23 while macroeconomic risks are growing.
