The Pilbara Minerals Ltd (ASX: PLS) share price has soared an incredible 20% over the last week, recovering the ground that it lost during the first 10 days of September, as shown on the chart below.
It may not come as a complete surprise to some investors with predictions of a recovery suggested by brave analysts.
Commodity prices are notoriously difficult to predict, we don't know when the next major move up or down is. What we can do as investors is look at the share prices being offered to us and decide whether to buy or not.
One of the most useful things we can observe is whether leadership figures decide to buy shares when prices are low. If they do, it can be a sign that they believe there's good value on offer and they're confident about the future.
Insider buying of Pilbara Minerals shares
Eagle-eyed investors may have seen that the ASX lithium share told the market that there have been two transactions involving directors buying more shares on the market.
It was announced that Stephen Conlon, spouse of director Kathleen Conlon, bought 30,000 Pilbara Minerals shares on 2 September 2024 for a total cost of $85,800. That comes out to a cost of $2.86 per share.
It was announced that director Nicholas Cernotta bought 40,938 Pilbara Minerals shares on 6 September 2024 for a total cost of $99,883.90. That works out to be a purchase price of approximately $2.44 per share. Cernotta managed to buy at almost the cheapest price of the September decline.
Is it still an opportunity to invest?
Pilbara Minerals still faces a significantly challenged landscape compared to what it was two years ago.
However, the business is well-placed in the sector with a strong balance sheet.
After seeing the result last month, Josh Gilbert, market analyst at eToro, said:
Last year may have been a golden year for Pilbara Minerals and it will certainly take some time to see those numbers again, with lithium prices needing to stage a serious rebound for that to be seen which is optimistic, to say the least in the short term.
However, Dale Henderson and his team aren't ready to roll over just yet and believe in the long-term demand story for lithium. The business continues to push forward with its growth projects, recently opening the world's largest lithium processing facility at its Pilgangoora operation in WA while also announcing a takeover of Latin Resources to improve its exposure in South America.
The business has also lined up a new AUD$1 billion debt facility to strengthen its balance sheet and lay the foundations for future growth. For now, it may be hard for shareholders to see the light at the end of the tunnel especially with lithium prices struggling to find a bottom. It may take some time for Pilbara Minerals to get its mojo back, but it's doing the right things at a difficult time to position for long-term success.
According to Factset, there are currently eight buy ratings on Pilbara Minerals shares, with six holds and four sells. While the average rating is a hold, the buy rating is the most popular choice. The average target price is $3.10, implying a possible rise of another 5% within the next 12 months, though that's certainly not guaranteed to happen.
