Pilbara Minerals Ltd (ASX: PLS) shares are under pressure again on Wednesday.
In morning trade, the lithium miner's shares are down 1% to $3.46.
This means that its shares are now down 23% over the last 12 months.
Are Pilbara Minerals shares good value now?
The team at Bell Potter has been looking at Pilbara Minerals shares. And while they're not prepared to recommend the company as a buy just yet, they do see plenty of value on offer here.
According to the note, the broker has initiated coverage on its shares with a hold rating and a $3.90 price target.
This implies a potential upside of 13% for investors over the next 12 months.
And if you're wondering about dividends, unfortunately, Bell Potter appears to believe that recent lithium price weakness means there will be no dividends in FY 2024.
What did the broker say?
Its analysts highlight the high level of short interest in its shares. However, they believe this is a short-term momentum trade rather than anything structural.
In fact, Bell Potter notes that with its low costs and strong balance sheet, the company is better positioned than most in the current environment. It said:
PLS is a large, liquid and clean exposure to global lithium fundamentals and sentiment. Recent lithium market weakness has seen heavy short selling in PLS (~21% short sold). However, we view this position as a short-sighted momentum trade. PLS is a low-cost producer, it operates in a tier one jurisdiction in Western Australia, and has a strong balance sheet ($2.6b net cash at 30 September 2023) which can withstand weaker lithium prices and support expansion programs.
Looking ahead, the broker remains positive on the lithium market. But seems to be waiting for further share price weakness before recommending Pilbara Minerals shares as a buy. It concludes:
We are confident that EV-led demand will see strong medium to long-term lithium market fundamentals. We also see the potential for PLS to participate in industry consolidation. We have initiated research coverage on PLS with a Hold recommendation, in conformity with our research recommendation structure.
