Pilbara Minerals Ltd (ASX: PLS) shares were in the spotlight on Monday.
The lithium miner's shares pushed 2.5% higher to $2.16 after investors responded positively to its full year results.
Can its shares keep rising from here? Let's see what analysts at Bell Potter are saying about the company.
What did Bell Potter think of its results?
Bell Potter notes that Pilbara Minerals' profits were short of expectations. Though, this was largely due to higher than expected exploration costs in Brazil. It said:
PLS reported FY25 underlying EBITDA of $97m (BP est. $110m) and statutory NPAT of -$196m (BP est. -$156m). The deviation from our estimates was due to higher exploration expenses at Colina (Brazil) and group depreciation costs with the expanded Pilgangoora asset. Free cash flow for the year of -$552m includes operating cash flow of $146m, capital expenditure of $654m, and a cash injection into the P-PLS lithium hydroxide joint venture of $40m.
One positive is that the broker believes that the company is getting itself in position to be a big winner when lithium prices eventually recover. It adds:
In FY26, PLS will focus on optimising the larger Pilgangoora operation and the advancement of earlier-stage projects in anticipation of a sustainable improvement in lithium market prices. Mid-stream demonstration plant construction completion is expected in Q2 FY25. A feasibility study outlining a Pilgangoora expansion above 2Mtpa is expected in FY27 and a study outlining a downstream joint venture with Ganfeng is ongoing. At Colina, data from ongoing exploration activities will be incorporated into an updated Mineral Resource Estimate and optimised development study, scheduled for release in Q4 FY26.
However, that isn't enough to stop the broker from downgrading Pilbara Minerals' shares.
Downgrade to hold
According to the note, Bell Potter has downgraded the lithium miner's shares to a hold rating (from buy) with an improved price target of $2.10 (from $2.00). This is just a touch below its current share price.
The broker made the move on valuation grounds, stating:
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 EV-demand driven long-term market outlook and believe higher prices are required to incentivise new supply. We move to a hold recommendation on our valuation and in line with our recommendation structure.
