Down 17% in a month, should I jump on Pilbara Minerals shares at nearly $4 a pop?

Has a recent pullback created a buying opportunity for investors?

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Pilbara Minerals Ltd (ASX: PLS) shares may be rising on Friday but that doesn't hide the fact that it has been a tough few weeks for the lithium miner.

Despite today's gain of 3% gain to $4.09, the company's shares are still down approximately 17% since this time last month.

Is this a buying opportunity for investors? Let's take a look and find out.

Should you buy Pilbara Minerals shares at this level?

A number of top brokers see a lot of value in the company's shares at the current level.

For example, Macquarie is arguably the most bullish broker around with an outperform rating and a $7.30 price target. This implies a potential upside of approximately 75% for investors over the next 12 months.

And with the broker expecting a 17 cents per share dividend in FY 2024, this potential yield of 4.15% boosts the total return on offer to almost 80%.

But Macquarie isn't alone in seeing a major upside ahead for Pilbara Minerals shares. This month, the team at Morgans added the lithium giant to the broker's best ideas list for September.

Morgans has named the company as its top pick among pure-play lithium stocks and put an add rating and $5.60 price target on its shares. This implies a potential upside of approximately 37% for investors over the next 12 months.

The broker explained why it is bullish. It said:

We rate PLS as our best pick of the pure-play lithium stocks. It is well funded, has a long resource life and is an established Australian operator with multiple growth options ahead of it. We think FY24's starting cash balance of over $3.3bn combined with strong operating cashflow will allow the company to pursue a meaningful capital management program while simultaneously funding growth. Updates on the company's downstream growth strategy are expected later this half which will guide towards the potential scope of special dividends and / or buy backs.

All in all, these brokers appear to see the recent pullback as a great opportunity for investors.

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 positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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