Higher or lower: Where next for Pilbara Minerals shares?

This lithium miner's shares have been on a wild ride. Where next for them?

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It has been a volatile 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 decline of approximately 43%. This has been driven by a sharp decline in lithium prices.

The Pilbara Minerals share price is currently trading closer to its low than its high at $3.89. Does this make it a good time to buy? Or could its shares go lower from here? Let's see what analysts are forecasting.

Where next for Pilbara Minerals shares?

Unfortunately, the general consensus is that the company's shares are heading lower from here.

For example, UBS and Citi have sell ratings on Pilbara Minerals' shares with price targets of $2.70 and $3.60, respectively. This implies a potential downside of 31% and 7.5% for investors over the next 12 months.

Over at Morgan Stanley, its analysts have an underweight rating and $3.35 price target on its shares. This suggests that they could fall 14% from current levels.

And finally, analysts at Goldman Sachs are arguably among the biggest bears out there. The broker currently has a sell rating and a $2.80 price target on its shares.

It believes its shares are expensive despite pulling back materially from recent highs. Goldman commented:

We see 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). Overall, we see PLS spending ~A$0.85bn on P1400, taking total capex spend from FY24E to FY28E on current and P1400 expansions to ~A$3bn, ~A$0.9bn ahead of consensus which already prices further expansion. Furthermore, 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.

It's not all doom and gloom, though. The team at Macquarie is a little more positive on Pilbara Minerals' shares. The broker currently has a neutral rating on them with a price target of $4.20. This implies a potential upside of 8% for investors.

Time will tell which broker makes the right call. Though, it seems quite likely that the direction its shares take will be dictated less by broker price targets and more by lithium prices. If there is a surprise rebound in prices, it could put a rocket under lithium stocks.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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.

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