On Thursday, Pilbara Minerals Ltd (ASX: PLS) shares traded flat after the release of the lithium miner's half-year results.
In case you missed it, the company reported a 65% decline in revenue to $757 million, a 77% decline in EBITDA to $415 million, and a 78% drop in underlying profit after tax to $273 million.
This was of course driven by a collapse in lithium prices over the last 12 months.
Should you be buying Pilbara Minerals shares following its results? Let's see what one broker is saying.
Are Pilbara Minerals shares in the buy zone?
The team at Goldman Sachs has been running the rule over the result and wasn't overly impressed. It said:
PLS reported Underlying EBITDA/NPAT of A$416mn/A$273mn, below GSe/ VA consensus expectations on higher exploration and corporate expenses (noted to be broadly the ongoing level in the near-term), and down on PcP due to lower revenue due to the moderating lithium price environment, with PLS realising -A$455mn of provisional pricing adjustments in the half.
In light of this, it will come as no surprise to learn that the broker's bearish view has not changed following this release.
According to the note, Goldman has reiterated its sell rating on the company's shares with a trimmed price target of $2.90. This implies potential downside of 21% for investors over the next 12 months.
The broker concludes:
Our 12m PT is down to A$2.90/sh, where PLS remains at a premium to peers (1.1x NAV & pricing ~US$1,260/t LT spodumene; peer average ~1.1x & ~US$1,160/t), with near-term FCF continuing to decline on lithium prices and increasing growth spend (c.-10% FCF yield in FY24E, and c.0% in FY25-27E). We also continue to see risk that a Beyond P1000 expansion disappoints vs. market expectations on a combination of capex, size, or timing. PLS also trades on a significant premium out to FY30E vs. peers on both EV/EBITDA and EV/Production on broadly normalised production/lithium prices.
