Pilbara Minerals Ltd (ASX: PLS) shares are having a positive session on Friday.
In morning trade, the lithium miner's shares are up 5% to $1.60.
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Why are Pilbara Minerals shares pushing higher?
Today's gain appears to have been driven by a combination of improving sentiment in the battery materials industry and a broker note out of Macquarie Group Ltd (ASX: MQG).
In respect to the former, a number of ASX lithium shares are rising today following a positive session for their counterparts on Wall Street.
As for the latter, this morning, Macquarie spoke positively about the company ahead of the release of its quarterly update later this month. It said:
Retain Outperform for both PLS and IGO, and we note increased share price volatility. We see IGO as a relative safe haven while PLS offers strong leverage to Li prices. Liquidity management are key for both LTR and SYA.
The broker believes that Pilbara Minerals will deliver stronger than expected shipments in the fourth quarter. However, its costs and average realised price could potentially disappoint. It said:
Lithium producers' volume solid: Our 4QFY25 spodumene shipments of 197kt for PLS are 7% ahead of VA consensus of 146kt. Our estimated average realised price of US$658/dmt is 4% below consensus, while costs are higher at US$425/t. For IGO, our spodumene production from Greenbushes of 377kt is in line with consensus. Our 4QFY25 production estimates for LTR and SYA are also within 3% of VA consensus.
How much upside?
Unfortunately, while Macquarie still has an outperform rating on Pilbara Minerals' shares, its price target of $1.50 is now below where they are trading.
As a result, there's no upside here according to the broker, just potential downside of 6% for investors.
Though, it sees scope for its shares to rise beyond its price target if lithium prices improve. Commenting on upside and downside risks, Macquarie said:
Commodity price and currency volatility, including the impact of tariffs on demand, to returns in the short term (upside/downside risk). Market supply (project deferrals or new supply sources) and demand changes (stimulus or removal of subsidies) which could drive prices higher/lower in the medium to long term (upside/ downside risk). Ramp-up and execution of PLS growth projects increasing capital or operating costs (downside risk). Exploration upside at Colina and Pilgnagoora leading to life extension and expansion potential (upside risk). Sovereign risk associated with host jurisdictions (Australia, Korea and Brazil) including additional taxes or resource nationalisation (downside risk).
