Is the Pilbara Minerals share price good value after recent weakness?

This lithium miner's shares are having a volatile year. Is this a buying opportunity?

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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.

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.

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.

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