PLS Group Ltd (ASX: PLS) shares are trading in the green this week. The ASX lithium stock has gained 21% over the past month and nearly 140% over the last 12 months, at the time of writing.
The question for investors is whether the rally can continue after PLS Group delivered a remarkably strong FY2026 result.
The latest earnings report, released on Monday, showed just how dramatically the lithium market has improved.
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Profit and revenue surge
Higher lithium prices and stronger market confidence provided a major boost to PLS' financial performance.
The company's realised selling price jumped 121% to US$1,488 per tonne. That helped revenue surge 152% to $1.9 billion, while net profit after tax (NPAT) exploded 369% higher to $528 million.
The company also improved its underlying operations. Unit operating costs (FOB) fell 9% to $569 per tonne, while sales volumes reached a record level. PLS Group also strengthened its balance sheet, helped by a successful US$600 million bond issue.
Management of PLS shares says the business enters FY2027 "larger, lower cost" and with significantly stronger finances and greater flexibility.
From defense to growth
The company plans to build on that position by progressing growth projects including P2000 and Colina, while ramping up production at Ngungaju.
During the year, the improving lithium environment allowed Pilbara Minerals to shift from defensive positioning towards growth. It restarted the Ngungaju processing plant and updated timelines for the P2000 and Colina projects.
The P2000 and Colina feasibility studies have also progressed, with the company approving approximately $175 million of pre-FID capital expenditure for P2000 in June.
There won't be many ASX companies with a market capitalisation above $10 billion delivering this level of growth during the current reporting season.
Are PLS shares still a buy?
Despite the impressive numbers, investors may need to be more selective after such a huge share-price rally.
Bell Potter believes PLS shares may have peaked for now. The broker retained its hold rating on Tuesday morning but increased its price target from $4.70 to $5.20. With PLS shares currently trading at $5.15, this suggests they are near fair value.
TradingView data shows a divided analyst community. Nine of 18 brokers rate the stock a buy or strong buy, while the average price target is $5.36, slightly above the current share price.
The most bullish forecast sees PLS shares climbing 28% to $7.00. At the other end of the spectrum, the most pessimistic forecast points to a potential 40% decline.
So, while PLS Group's fundamentals have improved dramatically, the share price may already reflect much of that optimism. After a 140% gain over 12 months, investors should weigh the company's strong growth prospects against lithium price volatility and valuation.
