What could $1,000 invested in Pilbara Minerals shares become in 1 year?

Is it worth investing in this lithium miner's shares?

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It is fair to say that it has been a turbulent 12 months for Pilbara Minerals Ltd (ASX: PLS) shares.

During this time, the lithium miner's shares have been as high as $5.43 and as low as $3.10. From top to bottom, that's a difference of 43%.

Pilbara Minerals shares are now trading close to the middle of this range at $4.05.

This means that if you were to invest $1,000 (and an additional 35 cents) into the company's shares today, you would be able to pick up 247 units.

But what could they be worth in 12 months? Let's take a look and see what analysts are saying about the lithium giant and its share price outlook.

Investing $1,000 into Pilbara Minerals shares

Opinion remains divided when it comes to this lithium miner.

There are analysts that see value in its shares at current levels and there are analysts that believe they are vastly overvalued.

Let's start with the bears.

Goldman Sachs is arguably the most bearish broker out there. It has a sell rating and $2.90 price target on the lithium miner's shares.

If this recommendation proves accurate, those 247 units would have a market value of $716.30. Not great!

The broker believes that the company's shares are overvalued based on its lithium price estimates. It said:

We are Sell rated on: (1) Valuation: where PLS remains at a premium to peers (1.2x NAV & pricing ~US$1,265/t LT spodumene; peer average ~1.1x & ~US$1,250/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) and a significant premium out to FY30E vs. peers on both EV/EBITDA and EV/Production on broadly normalised production/lithium prices; (2) Doubling production over 5 years with further optionality, though more than priced in, where we continue to see risk that a Beyond P1000 expansion disappoints vs. market expectations on a combination of capex, size, or timing (study expected Jun-24 Q), with a P1400 spend of ~A$0.85bn taking total capex spend over FY24-28E to ~A$3bn, ~A$0.9bn ahead of consensus which already prices further expansion; (3) Funded for further growth opportunities and ongoing capital management, though on more modest cash balance.

A bullish view

Over at Morgans, its analysts remain positive on Pilbara Minerals and its shares. They have an add rating and a $4.35 price target on them, which values those 247 units at $1,074.45.

Morgans believes management's strategy of growing its production is the right move in the current environment. It said:

We view PLS as a fundamentally strong and globally significant hard-rock lithium miner. The company has successfully executed on ramping up the expansion of Pilgangoora, while progressing plans to expand output (P680 and P1000). Supported by a strong balance sheet, with net cash at ~A$2.1bn at the end of December, PLS' expansion plans remain uniquely undeterred by the significant weakness in lithium prices. For PLS, the best form of defence against lithium prices is to stay on the attack, with its medium-term plans to continue expanding its production aimed primarily at building greater economies of scale and a more defensive margin.

Overall, it seems that there's not the biggest risk/reward on offer with its shares currently. Investors ought to weigh this up before considering an investment.

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 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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