Pilbara Minerals Ltd (ASX: PLS) shares were on form on Wednesday.
The lithium miner's shares charged higher after investors responded positively to its fourth quarter update.
Let's see if analysts at Bell Potter think that this could be your signal to also buy shares.
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What is the broker saying?
According to the note, Bell Potter was impressed with Pilbara Minerals' performance in the fourth quarter.
It highlights that its production rebounded stronger than expected. It said:
PLS reported quarterly spodumene concentrate (SC) production of 221kt (up 77% QoQ, BP est. 200kt, FY25 755kt); sales of 216kt at 5.1% Li2O (up 72% QoQ, BP est. 200kt, FY25 760kt); unit costs of A$619/t FOB (down 10% QoQ, BP est. A$601/t, FY25 A$627/t); and lithium recoveries of 72% (Q3 FY25 67%). The Pilgan Plant completed optimisation, supporting higher production and lower costs.
The broker was also pleased to see that the company reported strong cash flows from operations despite weak lithium prices. It adds:
We calculate cash flow from operations of $85m (Q3 FY25 $20m), an encouraging sign in the weak lithium price environment with cash generation set to improve on completion of growth investment. At 30 June 2025, PLS had cash of $974m (prior quarter $1,062m), net cash (inc. leases) of $331m and available cash liquidity of $1.6b. Production exceeded the upper end of revised (Oct-24) FY25 guidance; unit costs and capex were in the lower half of the ranges provided.
Another positive was its guidance for FY 2026, which implies a meaningful reduction in its costs. Bell Potter explains:
FY26 guidance points to higher SC production (820-870kt) and material reductions in unit costs (A$560-600/t) and capex ($300-330m, FY25 $569m), with the focus turning to cash preservation and operating efficiencies.
Is it time to buy?
Bell Potter remains positive on the company and sees value in its shares at current levels.
In response to the update, the broker has retained its buy rating and $2.00 price target.
Based on the current Pilbara Minerals share price of $1.73, this implies potential upside of almost 16% for investors over the next 12 months.
Commenting on its buy recommendation, the broker concludes:
PLS operates a low-cost asset in a tier one jurisdiction, is diversifying through the lithium value chain, and provides a clean exposure to global lithium fundamentals and sentiment. While we expect lithium prices to remain volatile, we hold a robust EVdemand driven long-term market outlook and believe higher prices are required to incentivise new sources of supply.
