The Pilbara Minerals Ltd (ASX: PLS) share price is down heavily over the past 12 months.
During this time, the lithium miner's shares have lost almost a third of their value.
Has this created a buying opportunity for investors? Let's see what Goldman Sachs is saying about the lithium giant after reinstating coverage on the company this morning.
What is the broker saying?
According to the note, the broker highlights that Pilbara Minerals has just completed the acquisition of Latin Resources Ltd (ASX: LRS).
This adds the promising Colina Project in Brazil to Pilbara Minerals' portfolio. Commenting on the deal, the broker said:
We now include the Colina project in our estimates, which we see as marginally accretive to our NAV, where we broadly factor in LRS' Preliminary Economic Assessment (PEA; Sep-23) initial production profile and expansion to 3.6Mtpa throughput on a more conservative timeline (FID late 1H CY26, with an ~18 month build, expansion rate from ~FY30E) and opex & capex (~50% overrun on PEA capex estimates), adjusting for the subsequently expanded resource base.
We see this supporting combined spodumene and low grade production of ~550-650ktpa SC6 over FY30-35E on an aggregate unit cost of ~US$600-700/t SC6, where we note our global mining team's feedback from a trip to the Brazil Lithium Valley highlighted a more constructive view of the potential in the Minas Gerais region.
Is the Pilbara Minerals share price good value?
The note reveals that Goldman believes investors should wait for a more attractive entry point before making an investment.
The broker has reinstated coverage on the company's shares with a neutral rating and $2.10 price target.
Based on its current share price of $2.33, this implies potential downside of 10% for investors over the next 12 months.
Commenting on its neutral recommendation, Goldman said:
We reinstate PLS with a Neutral rating relative to our lithium coverage (~1x NAV & pricing ~US$1,190/t LT spodumene vs. peers at ~1x & ~US$1,125/t), with our 12m PT of A$2.10/sh implying -8% TSR.
We see medium-term FCF remaining subdued, where though the roll off project spend and ramp up of P1000 supports a return to modest FCF generation over FY26/27E (~1-2% FCF yield), ongoing stripping and tailings spend combined with new projects at Colina and then Pilgangoora sees FCF dip (c. -3% yield), deferring meaningful cash generation (~10% yield) to the end of the decade. We note capex and execution risk remains across both projects, where uncertain project timing/a preference for remaining net cash and preserving balance sheet strength may defer value realisation.
