It has been a volatile year for the Pilbara Minerals Ltd (ASX: PLS) share price.
Over the last 12 months, the lithium miner's shares have been as low as $3.36 and as high as $5.66.
The company's shares currently change hands somewhere close to the middle of this range for $4.08.
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Is the Pilbara Minerals share price good value?
The team at Citi sees value in the company's shares at the current level.
According to a recent note, the broker has upgraded its shares to a buy rating with a $4.50 price target.
This implies approximately 10% upside from current levels.
In addition, the broker is expecting a 1.4% dividend yield in FY 2024, a 3.1% yield in FY 2025, and then a 4.1% yield in FY 2026.
What did Citi say?
Citi has trimmed its earnings forecasts to reflect softer lithium prices and weaker-than-expected production plans. However, it still sees enough value in the Pilbara Minerals share price to recommend the company as a buy. Particularly given its belief that lithium prices will eventually improve. It said:
We trim our EBITDA 7% this FY on lower M2M lithium pricing (-7% trim to realised pricing expectations), which has been impacted by weaker-than-expected battery production plans. While NEV sales are up mom/yoy, the order books have disappointed given high expectations. A strong October EV sales print could trigger battery producer restocking…or conversely a weaker set of metrics could see producers stick to buying lithium as-needed until Chinese New Year (weak season). Lithium pricing should get better; it's a question of timing.
Citi is now forecasting profit after tax of $1,075 million in FY 2024, $1,325 million in FY 2025, and $1,767 million in FY 2026. This equates to earnings per share of 35 cents, 44 cents, and 58 cents, respectively.
