Pilbara Minerals Ltd (ASX: PLS) shares have rallied over 8% in the past month, giving some short-term relief to shareholders who are down 27% this year.
The stock closed the session on Wednesday at $2.89 apiece.
Weak lithium prices have weighed heavily on the lithium producer this year, with Pilbara even suspending operations at its Ngungaju plant to cut costs.
But with broker opinions split, investors are left wondering—can Pilbara Minerals shares rise above the $3 mark? Let's see what the experts think.
What are analysts saying about Pilbara Minerals shares?
Analysts remain divided on the outlook for Pilbara Minerals shares. UBS has issued a sell rating with a price target of $2.35, implying a potential downside of 18%.
It does not see a path above $3 for the lithium stock.
The broker highlights concerns over persistent lithium oversupply, which could keep prices under pressure in the near term.
Lithium prices have been heavily depressed over the last three years, recently hitting a multi-year low. According to Trading Economics:
Despite relatively high stocks from a historical standpoint, battery manufacturers also reportedly raised purchasing activity amid risks of a trade war after Trump assumes office next year in the US.
In turn, the plunge in prices during the year drove multiple mines in Australia and China to close or cut costs, resulting in 190 tons of lithium mine curtailments since 2023.
But UBS does acknowledge Pilbara's efforts to stabilise its balance sheet, including maintaining $1.4 billion in cash reserves. This could be positive for Pilbara Minerals shares.
What about on the upside?
Meanwhile, Bell Potter has taken a more neutral stance, giving it a hold rating with a price target of $2.95. So close, yet so far, oh Pilbara Minerals shares.
The broker notes the company held strong despite tough market conditions and commends its strategic move to suspend production at Ngungaju.
But it also warns that lithium market volatility makes predicting a rebound difficult.
What about on the bullish side? Surely there is a Pilbara shares bull out there somewhere, rearing their horns, ready to charge?
Morgans has entered the building. Whilst not of bovine descent, analysts at the firm rate Pilbara shares a buy.
And low and behold, they have a price target of $3.25 on the stock.
The broker points to the company's efficient cost management and ability to scale up production quickly once market conditions improve.
Foolish takeaway
Pilbara Minerals shares are facing significant headwinds, with weak lithium prices and an oversupplied market clouding the outlook.
Whether Pilbara Minerals shares can reverse course depends on several factors. Most importantly, the debate hinges largely on what lithium does next.
Getting above the $3 mark will require a strong execution from management as well.
In the last 12 months, Pilbara shares are down more than 21%.
