Pilbara Minerals shares jump higher as JPMorgan tips 50% rise in lithium prices

On the charge.

| More on:
ASX lithium shares record A line-up of green lithium batteries, indicating positive share price movement for clean ASX lithium miners

Image source: Getty Images

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

Key points

  • Renowned US investment bank JPMorgan has forecast a sharp rise in lithium prices. 
  • In turn, leading ASX lithium stocks enjoyed a strong rally during Thursday's session.
  • JPMorgan also upgraded its rating for Pilbara Minerals shares and two other ASX 200 lithium stocks.

Thursday was a strong day for ASX 200 lithium stocks.

Shares in leading lithium producer Pilbara Minerals Ltd (ASX: PLS) lifted by 5.4% from Wednesday's close to end the day at $3.30 per share.

Fellow Western Australian lithium miner Liontown Resources Ltd (ASX: LTR) fared even better with its shares rocketing by 11.2% during the session.

However, it was Mineral Resources (ASX: MIN) that stole the spotlight.

Shares in this diversified miner ballooned by 13.7% on Thursday after announcing production records for the September quarter.

Notably, the company also reported a 31% increase in the selling prices for its lithium.

So, what sparked Thursday's eye-catching rally?

It appears that leading American investment bank JPMorgan Chase & Co (NYSE: JPM) may have played a part.

In a nutshell, the broker released a bullish research note on the lithium sector where it forecast a sharp rebound in prices.

Let's take a closer look at JPMorgan's viewpoint, as reported in the Financial Review.

Lithium prices set to rise?

JPMorgan appears upbeat on lithium's near-term future.

It upgraded its forecast for spodumene – the type of lithium mined in Australia – from US$800 per tonne to between US$1,100 and US$1,200 per tonne for 2026 and 2027.

Here, it cited growing demand for electric vehicles and higher expected production rates for large-scale battery storage.

JPMorgan's head of basic materials research, Lyndon Fagan, commented:

After what was looking like a soft few years ahead for lithium prices, energy storage battery shipments have shown massive growth year-to-date.

Fagan added that batteries are expected to account for about 30% of lithium demand in 2026, rising to 36% by the end of the decade.

In turn, the broker increased its long-term spodumene price forecast from US$1,100 per tonne to US$1,300 per tonne.

So what?

Stronger prices help drive revenue and margins for lithium miners, which can potentially lead to significant share price gains.

And JPMorgan has now upgraded its outlook for Pilbara Minerals shares from neutral to overweight.

As a sidenote, the company recently announced a 24% increase in the average realised selling price for its lithium product.

Overall, Pilbara Minerals shares have now increased by 119% in the past six months.

Meanwhile, JPMorgan also lifted its rating for Mineral Resources and Liontown shares to neutral – up from its most recent underweight classification.

Liontown shares have now soared by 116% in the past six months, with Mineral Resources shares rising by 134%.

For context, the All Ordinaries Index (ASX: XAO) is up by 10% during the same period.

JPMorgan Chase is an advertising partner of Motley Fool Money. Motley Fool contributor Bart Bogacz 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 JPMorgan Chase. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Broker Notes

Smiling man sits in front of a graph on computer while using his mobile phone.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

White declining arrow on a blue graph with an animated man representing a falling share price.
Materials Shares

Experts call time on these rip-snorting ASX 200 mining shares

These 2 ASX 200 mining stocks have risen by 160% and 230%, respectively, over the past 12 months.

Read more »

Two people comparing and analysing material.
Broker Notes

Buy, hold, sell: Netwealth, Santos, and South32 shares

Morgans has given its verdict on these shares following updates.

Read more »

Business man at desk looking out window with his arms behind his head at a view of the city and stock trends overlay.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Three smiling corporate people examine a model of a new building complex.
Broker Notes

Broker says this ASX All Ords stock could rise 15%

Bell Potter thinks investors should be buying this growing company's shares.

Read more »

A man slumps crankily over his morning coffee as it pours with rain outside.
Broker Notes

Why Lynas shares could crash 33%

Bell Potter believes this rare earths stock could lose a third of its value.

Read more »

Three girls compete in a race, running fast around an athletic track.
Broker Notes

Two ASX 200 stocks to buy after crashing 6-9% yesterday

Bell Potter is tipping an 18-40% resurgence for these stocks.

Read more »

A woman looks quizzical as she looks at a graph of the share market.
Broker Notes

Looking for double-digit returns? Check out RBC Capital Markets' picks ahead of reporting season

These shares could deliver strong upside.

Read more »