Pilbara Minerals Ltd (ASX: PLS) shares are on course to end the month in the red.
In morning trade, the lithium miner's shares are down 2% to $4.85.
Investors may now be wondering if this pullback has created a buying opportunity in August. Let's find out.
Are Pilbara Minerals shares a buy in August?
Opinion remains divided on whether Pilbara Minerals shares are good value at the current level.
For example, the team at Morgan Stanley believes investors should be staying clear of the company's shares. Its analysts feel that valuation, pricing and project development risks mean that the risk/reward is to the downside for investors.
As a result, last week, the broker put an underweight rating and $4.15 price target on its shares. This implies almost a 15% downside for investors over the next 12 months.
But not everyone is bearish. The teams at Citi and Macquarie currently have the equivalent of buy ratings on Pilbara Minerals shares.
Citi believes that recent lithium price weakness has been overdone. Last week it said:
Long term outlook positive with sustained structural deficit unfolding. Massive macro moves around energy transition. PLS thinks market reaction to Guangzhou pricing overdone; would caution that we've seen outsized responses to these small-volume contract markets. PLS SC demand remains strong with no issues selling product.
However, with a price target of $5.10, the upside on offer with Citi's recommendation is somewhat limited for investors at current levels.
The good news, though, is that Macquarie's valuation is significantly higher. So, if its analysts are to be believed, investors could do very well buying in at today's prices.
Macquarie currently has an outperform rating and a $7.30 price target on its shares, which implies a potential upside of approximately 25%.
Time will tell which brokers make the right call.
