It has been an uncharacteristically difficult period for the Pilbara Minerals Ltd (ASX: PLS) share price.
Concerns over falling lithium prices have put a lot of pressure on this mining giant's shares and has led to them losing approximately 21% of the value over the last six months.
Is the Pilbara Minerals share price weakness a buying opportunity?
One leading broker that believes investors should be snapping up this lithium share after recent weakness is Morgans.
According to a recent note, the broker has put an add rating and $5.30 price target on its shares.
Based on the latest Pilbara Minerals share price of $3.80, this implies potential upside of just under 40% for investors over the next 12 months.
What did the broker say?
Pilbara Minerals has become the broker's top pick in the industry recently thanks partly to its takeover appeal.
Morgans believes it could be an attractive option for a large miner that wants immediate exposure to lithium spodumene. It explained:
We see both AKE and PLS as potential targets in addition to the ongoing interest in LTR. The relative attractiveness of each depends on the needs of the buyer. AKE is cheaply priced on an EV / resource basis but has comparatively less spodumene. Spodumene is the most direct path to producing lithium hydroxide, the preferred form for the higher nickel content cathodes, which power the longer range vehicles preferred in western markets.
PLS is an Australian spodumene pure play and would suit an acquirer that is looking for a fast way to get exposure to lithium. PLS does not have the resource base of AKE though and is more expensive per tonne of LCE. The Gwanyang plant (PLS holds a minority share in JV with POSCO) is contracted to take 315ktpa of spodumene but the P1000 expansion will leave the company with a significant amount of yet to be contracted production. The company's size would restrict interest to larger mining houses, international chemicals companies, battery producers or OEMs.
All in all, don't be surprised if Liontown Resources Ltd (ASX: LTR) isn't the only lithium share to receive a takeover approach this year.
