Pilbara Minerals share price falls again: Is it time to buy?

Here's what Citi is saying about this lithium giant following its FY 2023 results.

| More on:
A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Pilbara Minerals Ltd (ASX: PLS) share price is having another tough session on Monday.

In morning trade, the lithium miner's shares are down 4% to $4.51.

This means that they are now down approximately 12% since the release of its FY 2023 results.

Is the Pilbara Minerals share price good value now?

One broker that doesn't think investors should be rushing in just yet is Citi.

This morning, in response to the company's results, the broker has downgraded its shares to a neutral rating with a trimmed price target of $4.80.

Based on the current Pilbara Minerals share price, this implies a potential upside of just over 6% for investors over the next 12 months.

In light of this and despite believing that the company is a high-quality miner, Citi doesn't appear to believe this makes the risk/reward on offer with its shares sufficient enough to warrant a buy rating. It commented:

Changed story? We don't think so. Neutral on valuation. PLS lost +7% today on the outlook and implications for FCF. We've doubled our capex expectations for the FY and assumed a higher run rate is the norm (waste stripping); we no longer model cash build in 1H24. That said we expect FY24 to be transitional as volumes ramp up and model a return to 10% FCF yield in FY25. We don't think the story has changed looking through FY24e's single digit FCF; PLS is operationally ahead of peers, has a Tier 1 asset and a war chest of +A$3.4bn with the option to buy-back stock or pay a FF special. We trim our TP 30cps on higher capex and move to Neutral on valuation. Investor questions today centered around i) capex delta, ii) potential for returns i.e. special, iii) uplift in stripping ratio for Pilgangoora.

All in all, Citi appears to believe investors should sit tight and wait for a better entry point down the line.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

Miner looking at a tablet.
Resources Shares

6 popular ASX 200 mining shares reporting next week

Next week is major with some of Australia's most important companies reporting results to the market.

Read more »

A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.
Materials Shares

Do you own Rio Tinto shares? Here's your FY24 results preview

How big will the Rio Tinto dividend be in FY 2024?

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Materials Shares

Own Pilbara Minerals shares? Here's what to watch in next week's update

What will the lithium giant report next week? Let's find out.

Read more »

Image of young successful engineer, with blueprints, notepad and digital tablet, observing the project implementation on construction site and in mine.
Materials Shares

Buying BHP shares? Here's your half year results preview

The Big Australian is releasing its half year results next week. Here's what to expect.

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Materials Shares

Pilbara Minerals shares charge higher on 'game-changer' news

This lithium giant is catching the eye of investors on Thursday. But why?

Read more »

A man raises his reading glasses in a look of surprise.
Earnings Results

South32 share price higher on 577% profit jump

This mining giant's profits have surged during the first half.

Read more »

Business people discussing project on digital tablet.
Materials Shares

Own BHP shares? Here's some big news

Let's see what the Big Australian has announced to the market.

Read more »

A female broker in a red jacket whispers in the ear of a man who has a surprised look on his face as she explains which two ASX 200 shares should do well in today's volatile climate
Materials Shares

Should you buy Pilbara Minerals shares in February?

What are analysts at Bell Potter saying about this lithium giant.

Read more »