Why did Pilbara Minerals shares rocket 50%+ in August?

This lithium miner's shares were in fine form last month. Let's find out why.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Owners of Pilbara Minerals Ltd (ASX: PLS) shares were smiling in August.

During the month, the lithium miner's shares rocketed an impressive 52%.

A young man punches the air in delight as he reacts to great news on his mobile phone.

Image source: Getty Images

Why did Pilbara Minerals shares rocket last month?

There were a couple of catalysts for this strong rise last month.

The main one was a rebound in lithium prices, which lifted most ASX lithium stocks.

For example, Liontown Resources Ltd (ASX: LTR) shares were up over 20% in August and Mineral Resources Ltd (ASX: MIN) shares jumped over 30%.

Lithium prices gained for a number of reasons. This includes optimism over demand and a crackdown on lithium mining activities in China.

This rebound has sparked hopes that lithium prices have now bottomed and that it could be onwards and upwards from here.

What else?

Also giving Pilbara Minerals shares a boost was the release of its FY 2025 results.

The lithium giant reported revenue of $769 million and underlying EBITDA of $97 million. While both were down sharply on the prior corresponding period, they appear to have been better than some investors had feared.

Should you invest?

Opinion is divided on whether Pilbara Minerals shares are good value or not.

For example, the team at Morgans thinks that investors should keep their powder dry for the time being.

Last month, in response to its results release, the broker downgraded its shares to a hold rating with a $2.30 price target. It said:

FY25 headline numbers contained no major surprises. Higher D&A than forecast and accounting treatment of some expenditure were behind the lower underlying NPAT compared to MorgansF and consensus. PLS' FY26 strategy will focus on maximising operational performance and fully realising the benefits of the Pilgangoora expansion, while maintaining cost discipline and progressing diversification initiatives at Colina (Brazil) and P-PLS (South Korea).

PLS highlighted increased demand for its product from chemical converters but cautioned lithium prices will remain volatile and subject to sharp spikes and drops. We downgrade to a HOLD rating (from BUY) following a strong share price run with an unchanged A$2.30ps Target Price.

Elsewhere, Canaccord Genuity has retained its buy rating on its shares with a price target of $2.70. This implies potential upside of almost 16% for investors over the next 12 months.

And while Macquarie Group Ltd (ASX: MQG) has an outperform rating and $2.20 price target on its shares, this is lower than where Pilbara Minerals shares currently trade.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

A man sitting at his dining table looks at his laptop and ponders the share price.
Materials Shares

ASX lithium shares 'compelling' as top broker adjusts ratings

UBS predicts the global oil shock caused by the war in Iran will drive higher demand for electric vehicles.

Read more »

Three workers jump in the air at a steel factory.
Materials Shares

This ASX steel stock is unlocking hidden value. So why is it falling today?

BlueScope shares fall after an update on surplus land developments.

Read more »

A man slumps crankily over his morning coffee as it pours with rain outside.
Materials Shares

Guess which ASX mining stock is crashing 24% today

The miner is raising capital for the fourth time in as many years.

Read more »

A man wearing a suit and holding an EV charger gives the thumbs up.
Materials Shares

3 reasons to buy this high flying ASX lithium stock for the long term

World-class assets, strong balance sheet, and smart growth support long-term outlook.

Read more »

Young successful engineer, with blueprints, notepad, and digital tablet, observing the project implementation on construction site and in mine.
Materials Shares

Is this ASX iron ore stock a better buy than Fortescue?

Bell Potter thinks this stock could rise 90%.

Read more »

Lion holding and screaming into a yellow loudspeaker on a blue background, symbolising an announcement from Liontown.
Materials Shares

Are Liontown shares a buy, hold, or sell?

Ord Minnett has given its verdict on this lithium miner.

Read more »

two business people shake hands through the glass wall of a business office with a board table and laptop computer in view between them.
Materials Shares

A major long-term deal is lifting this ASX stock today

Nufarm shares are edging higher after locking in a long-term biofuels deal.

Read more »

Miner holding a silver nugget.
Materials Shares

Why are these ASX silver stocks racing higher today?

A 4% silver rise sparked double-digit gains in silver shares.

Read more »