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.
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$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.
