The share market hasn't been kind to the Pilbara Minerals Ltd (ASX: PLS) share price recently.
On Thursday, the lithium miner's shares hit a two-year low of $2.78 before recovering a touch to end the session at $2.87.
This latest decline means that its shares are now down 43% since this time last year.
Is this a buying opportunity? Let's see what analysts at Bell Potter are saying about the mining.
What is Bell Potter saying about the Pilbara Minerals share price?
I have good and bad news for the lithium giant's shareholders.
The good news is that the broker appears to believe that the Pilbara Minerals share price has bottomed.
The bad news is that it isn't recommending it as a buy just yet.
According to the note, Bell Potter has reaffirmed its hold rating with a trimmed price target of $3.30. This implies potential upside of 15% from current levels.
What did the broker say?
Bell Potter was pleased with Pilbara Minerals' stronger than expected production during the fourth quarter. And while it was disappointed with its realised lithium pricing, it is optimistic that this will improve in the current quarter. It commented:
PLS reported June 2024 quarterly spodumene concentrate (SC) production of 226kt (BP est. 190kt) and sales of 236kt (BP est. 190kt). Full utilisation of P680's Primary Rejection Facility and temporary mobile ore sorting drove higher lithium recoveries (72% vs 65% in Q3) and lower unit costs (A$591/t FOB, BP est. A$689/t). However, realised pricing was weak (US$840/t SC5.3%, BP est. US$936). The post quarter-end completion of offtake price reviews with two major customers should support improved realisations going forward.
Commenting on the company's guidance, the broker said:
FY25 guidance points to SC production of 800-840kt (21% higher yoy, midpoint), and unit costs of $650-700/t FOB (6% higher yoy, midpoint). In 1H FY25, plant run time and performance will be impacted by P1000 tie-ins and commissioning. Accordingly, the impressive June 2024 quarter operational performance cannot be extrapolated into early FY25. We forecast a weaker September 2025 quarter, with a 2H weighting towards materially improved lithium recoveries, production, and unit costs, as ramp-up progresses towards 1Mtpa SC production run-rates.
Keep your powder dry
As I mentioned above, the broker doesn't believe the Pilbara Minerals share price is in the buy zone just yet. This is largely because of weak near-term lithium market sentiment. It explains:
PLS is a large, liquid and clean exposure to global lithium fundamentals and sentiment. PLS is a low-cost producer, it operates in a tier one jurisdiction in Western Australia, and has a strong balance sheet ($1.6b cash at 30 June 2024) which can withstand weaker lithium prices and support expansion programs. We are confident that EV-led demand will see strong long-term lithium market fundamentals. However, weak near-term lithium market sentiment results in us retaining our Hold recommendation.
