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.
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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.
