Down 26% in the past 6 months, is Pilbara Minerals stock a buy today?

One of the darlings of the lithium sector, is now the time buy Pilbara Minerals?

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Pilbara Minerals Ltd (ASX: PLS) stock has taken a tumble in 2023, falling 25.8% over six months to close at $3.51 yesterday.

The fall has taken place alongside a dramatic slide in lithium commodity prices.

By comparison, the S&P/ASX 200 Index (ASX: XJO) is down 3.6% over the past six months, and the S&P/ASX 200 Materials Index (ASX: XMJ) is down 2.4%.

So, is Pilbara Minerals stock a buy-the-dip opportunity just waiting for the taking?

Let's see what the experts say.

Is it time to buy Pilbara Minerals stock?

Medallion Financial Group director Philippe Bui says Pilbara Minerals stock will make a great investment once commodity prices settle down.

Bui told The Bull: "Pilbara is trading on an undemanding price-earnings (P/E) ratio. The company aims to produce a million tonnes by the end of 2025, a significant increase on existing production."

Bui points out that Pilbara Minerals paid a fully franked dividend of 25 cents per share in FY23. At today's share price, that equates to a trailing dividend yield of 7.1%.

Bui adds:

The lithium company had $3.3 billion of cash on its balance sheet when announcing its full-year results…

Provided lithium prices settle in what has been a recent downturn, Pilbara should be able to deliver.

Morgans remains positive on Pilbara Minerals stock despite its recent disappointing quarterly update.

The broker retained its add rating with a trimmed price target of $5. This indicates a potential upside of 42.5% for investors buying today.

Goldman Sachs retained its neutral rating with a reduced price target of $3.80 following the update. This implies a more modest potential upside of 8.3% from current levels.

The broker commented:

While spot prices support strong FCF yields over and above planned incremental capex spend, we see near-term FCF declining on lithium prices and increasing growth spend (no FCF in FY24/25E), with the stock trading at ~1.1x NAV (in line with peer average ~1.05x), or pricing ~US$1,120/t spodumene (GSe US$1,000/t LT real).

My Fool colleague Tristan just bought some Pilbara Minerals stock, citing the recent price fall and other business fundamentals as reasons for his purchase.

He noted that Pilbara "seems to experience much more volatility than many other businesses on the ASX that have market capitalisations above $10 billion" and thus, this can present good buy-in opportunities.

It's worth noting that Pilbara Minerals is currently the most shorted share of the ASX.

As my colleague James reported this week, the short interest has increased again to 17.55%.

That's high.

So, investors may choose to wait a little longer before buying Pilbara Minerals stock for the long term.

Motley Fool contributor Bronwyn Allen 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 Goldman Sachs Group. 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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