How much could a $10,000 investment in Pilbara Minerals shares be worth in 12 months?

Do analysts think this lithium giant could deliver big returns or destroy wealth?

| More on:
A man in his 30s with a clipped beard sits at his laptop on a desk with one finger to the side of his face and his chin resting on his thumb as he looks concerned while staring at his computer screen.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Over the last five years, Pilbara Minerals Ltd (ASX: PLS) shares have been among the best performers on the Australian share market.

During this time, the lithium miner's shares have absolutely smashed the market with a stunning gain of 458%.

This means that if you had invested $10,000 into the company's shares back then, your investment would be worth over $55,000 today.

This has been driven by the company's emergence as one of the leading players in the lithium industry thanks to its 100% owned, world class Pilgangoora Lithium-Tantalum Project, which is located approximately 120 kilometres from Port Hedland in the Pilbara region of Western Australia.

But those returns have been and gone. What could happen if you were to invest $10,000 into Pilbara Minerals shares today?

Let's see what analysts are forecasting for the lithium miner over the next 12 months.

$10,000 invested in Pilbara Minerals shares

The company's shares are currently changing hands for $4.08. This means that with $10,000 (and 8 cents more) to invest, you could pick up 2,451 units.

Unfortunately, finding an analyst that is bullish on this miner is difficult right now due to the bleak outlook for lithium prices.

In fact, the most bullish broker out there appears to be Macquarie with its neutral rating and $4.20 price target.

If the Pilbara Minerals share price were to rise to that level, it would value those 2,451 units at $10,294.20.

That's not exactly a compelling return and arguably doesn't justify the risks involved in investing in the lithium industry.

But things could be much worse.

The bear predicting big declines

According to a recent note out of Goldman Sachs, its analysts have a sell rating and $2.80 price target on the company's shares.

If Pilbara Minerals' shares were to fall to that level, your investment would have a market value of $6,862.80. That's over $3,000 less than you paid.

Goldman explains that it thinks the company's shares are expensive based on its lithium price forecasts (which have been very accurate over the last 18 months). It said:

We see PLS' net cash declining to ~A$0.8-0.9bn (though still a relatively strong position vs. some peers and defensive into a declining lithium price), where with the stock trading at ~1.2x NAV (peer average ~1.05x), or pricing ~US$1,300/t spodumene (including a nominal value of A$1.1bn for growth) vs. peers at ~US$1,210/t (lithium pure-plays ~US$1,110/t; GSe US$1,150/t LT real), we see PLS as relatively expensive on fundamentals.

Overall, based on the above, it may be best to sit tight and wait for a better entry point.

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 and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

A woman is very excited about something she's just seen on her computer, clenching her fists and smiling broadly.
Materials Shares

Why did the Sayona Mining share price just leap 5%?

The Sayona Mining share price is smashing the benchmark today. But why?

Read more »

Man in yellow hard hat looks through binoculars as man in white hard hat stands behind him and points.
Mergers & Acquisitions

BHP shares on watch after new $74b Anglo American takeover offer rejected

Is it third time lucky for the mining giant?

Read more »

Two miners standing together.
Materials Shares

Buy one, sell the other: Goldman's verdict on these 2 ASX lithium shares

The broker says lithium prices will not bottom until 2025. Here's what you should do in the meantime.

Read more »

a construction worker sits pensively at his desk with his arm propping up his chin as he looks at his laptop computer while wearing a hard hat and visibility vest in a bunker style construction shed.
Materials Shares

Which ASX 200 stock just plunged 12% despite record full-year earnings?

It looks like an impressive report card but UBS doesn't like the FY25 guidance.

Read more »

A man slumps crankily over his morning coffee as it pours with rain outside.
Materials Shares

Why did this ASX All Ords stock just crash 24%?

What is weighing down this lithium stock today? Let's find out.

Read more »

two men in hard hats and high visibility jackets look together at a laptop screen that one of the men in holding at a mine site.
Share Fallers

Why did the Core Lithium share price just crash 6%?

Investors are bidding down the Core Lithium share price today.

Read more »

Man with rocket wings which have flames coming out of them.
Materials Shares

Bell Potter says this speculative ASX stock could rise 200%+

This stock could more than triple in value according to the broker. But it is only suitable for high risk…

Read more »

Emotional euphoric young woman giving high five to male partner, celebrating family achievement, getting bank loan approval, or financial or investing success.
Share Gainers

Guess which ASX lithium share just leapt 13% on major financing news!

Investors are bidding up the ASX lithium share on the back of major financing news.

Read more »