The Pilbara Minerals Ltd (ASX: PLS) share price has been through enormous pain in the last few years. But could this be the time to invest, considering the positive outlook for the ASX lithium share's earnings?
We'll soon get to the expert projections about where the miner's profit could go in the next few years, but let's first quickly remind ourselves of the company's latest update.
Pilbara Minerals recently told investors about its quarterly update for the three months to 31 December 2024.
It said it sold 204kt of spodumene concentrate for the quarter, down 5%, at a realised price of US$700 per dry metric tonne (dmt). The realised price was 3% more than the three months to 30 September 2024, helping revenue rise 3% to A$216 million. The ASX lithium share said its costs were flat in American dollar terms but rose 2% in Australian dollar terms.
The company's cash balance was A$1.2 billion at 31 December 2024.
Let's look at what UBS thinks the company's earnings could be in the coming financial years.
First, FY25
After seeing the quarterly update, UBS said the report was "solid" and that the downgraded FY25 production guidance of 700kt to 740kt could be "conservative".
UBS currently forecasts that FY25 could see 763kt of production. The broker also said the realised price of US$700 per tonne beat its expectations.
The broker noted that another lithium business, SQM, reportedly experienced a price of US$921 per tonne at a recent auction, which was above UBS' forecast of US$800 per tonne for 2025. The broker then said:
This…may indicate inventories have tightened up at the front of the chemical supply chain (potentially on weaker African shipments over Xmas). So far supply from Australia seems fairly robust (post the PLS & Mineral Resources Ltd (ASX: MIN) cuts) and we note the chemical price hasn't moved yet. On our modelling PLS is still pricing in ~US$1,300/t SC6.0 indefinitely vs US$850-900/t spot and our US$1,400/t long-term price.
UBS forecasts Pilbara Minerals could make $81 million in net profit in FY25.
Then, FY26
The broker thinks the 2026 financial year could be even better for the company. UBS noted that with the Latin Resources Ltd (ASX: LRS) acquisition closing, the broker assumes Pilbara Minerals "will take some time to optimise the Salinas project ahead of a potential final investment decision (FID) in mid-2026".
In terms of production, UBS forecasts that Pilbara Minerals could achieve 889kt of spodumene concentrate. With that, the broker predicts Pilbara Minerals could make $100 million in net profit. Growth of profit could help support the Pilbara Minerals share price.
Next, FY27
In the 2027 financial year, UBS is projecting that Pilbara Minerals' production could rise to 1,150kt, "assuming its all guns blazing in FY27".
UBS projects that the ASX lithium share's net profit could more than double to $215 million in FY27.
After that, FY28
The broker said in its recent note that "the bigger medium term question remains what happens" with its production after FY27.
The broker believes that after an 18-month construction period, production could commence in March 2028 and ramp up to 500kt per year (including staged expansion) by the end of 2030.
UBS projects that Pilbara Minerals' net profit could jump by close to another $100 million to $310 million in the 2028 financial year.
Finally, FY29
The last year in this series of projections is the 2029 financial year, when Pilbara is expected to see the most profit generated.
UBS currently forecasts Pilbara Minerals' net profit could rise to $378 million in FY29. That would suggest the Pilbara Minerals share price is trading at 19x FY29's estimated earnings.
