The Pilbara Minerals Ltd (ASX: PLS) share price has pushed deep into the red this past week of trade, sliding 14% lower in that time.
Before the open on Thursday, shares in the lithium producer are now settled at $2.58 apiece. They are down 34% this year to date.
Analysts have mixed views on the Pilbara Minerals share price. But there's a bull case to be made for investors looking beyond the current lithium market downturn.
Let's see what the experts think.
Pilbara Minerals share price slides
FY24 was tough for Pilbara Minerals. The company reported a 69% decline in revenue to $1.25 billion and an 84% drop in pre-tax earnings.
Meanwhile, net profits fell by 86% year over year.
The culprit for such sharp declines? According to my colleague Tristan, mostly a 74% collapse in realised lithium prices.
No final dividend was declared either, which likely added to the disappointment.
Despite these challenges, Pilbara's production increased by 16% to 707.1 thousand tonnes (kt), slightly beating market expectations.
It also secured a new $1 billion debt facility, which will be used to refinance existing debt and improve financing costs.
This could provide it the flexibility to pursue future growth opportunities in my view, even in the current weak lithium price environment.
Brokers: A mixed bag
Despite the slump in lithium pricing, views on the Pilbara Minerals share price are mixed. According to CommSec, the consensus of analyst estimates rates it a hold.
But Bell Potter has taken a cautious stance on Pilbara Minerals. It rates the stock a hold and has a price target of $3.15 apiece.
Still, at the current share price, and after a further sell-off this past week, this implies a modest upside of around 22%.
Bell Potter pointed out that Pilbara's profits fell short of estimates, according to my colleague James. This was largely due to spending on its mid-stream demonstration plant.
However, the broker remains positive about the company's long-term fundamentals, stating that Pilbara offers "clean exposure to global lithium fundamentals and sentiment."
It also noted that Pilbara's low-cost production, strong balance sheet, and tier-one Western Australian mining jurisdiction give the company a solid foundation.
With the challenges in lithium pricing, backed up by the higher costs of project financing due to currently high interest rates, this could be an advantage.
The broker sees this as a positive, noting Pilbara has "updated its capital management framework" to bring debt down.
It will focus on a "leverage target of less than 1.5 times," meaning its net debt will not exceed 1.5 times its annual pre-tax income.
Consequently, it feels Pilbara can "withstand weaker lithium prices".
Pilbara Minerals share price takeaway
Beaten-down stocks always raise an eyebrow for investors looking to potentially grab a bargain. The Pilbara Minerals share price is certainly beaten down, having slipped more than 45% in a year.
