The Pilbara Minerals Ltd (ASX: PLS) share price was on form on Wednesday.
The lithium miner's shares rose almost 6% to end the day at $3.46.
The catalyst for this was the release of a second quarter update which revealed that the company continues to generate a decent amount of cash despite battling low lithium prices.
Can the Pilbara Minerals share price keep rising?
The team at Bell Potter has run the rule over the company's update and appears to have been pleased with what it saw. It commented:
PLS reported December 2023 quarterly spodumene concentrate production of 176kt (BP est. 168kt) and sales of 160kt (BP est. 168kt). An average price of US$1,113/t (SC5.2%) was realised, down 50% qoq, consistent with weaker lithium markets. Higher production and sales volumes drove lower unit costs of A$639/t FOB (15% decrease qoq, BP est. A$647/t). PLS had cash of $2.1b at quarter's end, following a $758m cash tax payment and $222m of capital expenditure. Cash margin from operations was $176m.
However, the broker believes Pilbara Minerals shares are close to being fully valued now.
As a result, its analysts have reaffirmed their hold rating and $3.60 price target. This implies approximately 4% upside from current levels. It explains:
PLS is a large, liquid and clean exposure to global lithium fundamentals and sentiment. PLS is a low-cost producer, it operates in a tier one jurisdiction in Western Australia, and has a strong balance sheet ($2.1b net cash at 31 December 2023) which can withstand weaker lithium prices and support expansion programs. We are confident that EV-led demand will see strong long-term lithium market fundamentals. We also see the potential for PLS to participate in industry consolidation. Our $3.60 12-month forward valuation results in our hold recommendation being retained.
