Pilbara Minerals share price falls again: Is it time to buy?

Here's what Citi is saying about this lithium giant following its FY 2023 results.

| More on:
A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.

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

The Pilbara Minerals Ltd (ASX: PLS) share price is having another tough session on Monday.

In morning trade, the lithium miner's shares are down 4% to $4.51.

This means that they are now down approximately 12% since the release of its FY 2023 results.

Is the Pilbara Minerals share price good value now?

One broker that doesn't think investors should be rushing in just yet is Citi.

This morning, in response to the company's results, the broker has downgraded its shares to a neutral rating with a trimmed price target of $4.80.

Based on the current Pilbara Minerals share price, this implies a potential upside of just over 6% for investors over the next 12 months.

In light of this and despite believing that the company is a high-quality miner, Citi doesn't appear to believe this makes the risk/reward on offer with its shares sufficient enough to warrant a buy rating. It commented:

Changed story? We don't think so. Neutral on valuation. PLS lost +7% today on the outlook and implications for FCF. We've doubled our capex expectations for the FY and assumed a higher run rate is the norm (waste stripping); we no longer model cash build in 1H24. That said we expect FY24 to be transitional as volumes ramp up and model a return to 10% FCF yield in FY25. We don't think the story has changed looking through FY24e's single digit FCF; PLS is operationally ahead of peers, has a Tier 1 asset and a war chest of +A$3.4bn with the option to buy-back stock or pay a FF special. We trim our TP 30cps on higher capex and move to Neutral on valuation. Investor questions today centered around i) capex delta, ii) potential for returns i.e. special, iii) uplift in stripping ratio for Pilgangoora.

All in all, Citi appears to believe investors should sit tight and wait for a better entry point down the line.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 no position in any of the stocks mentioned. 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 Materials Shares

Lion roaring in the wild, symbolising a rising Liontown share price.
Materials Shares

Why did the Liontown share price rip 19% higher today?

This ASX lithium share was the fastest riser of the ASX 200 today.

Read more »

A female miner wearing a high vis vest and hard hard smiles and holds a clipboard while inspecting a mine site with a colleague.
Materials Shares

Why are Fortescue shares charging higher today?

What is getting investors excited today? Let's find out.

Read more »

Business people discussing project on digital tablet.
Materials Shares

What does Macquarie think Liontown Resources shares are worth?

Let's see if analysts think that this lithium miner is in the buy zone or best avoided.

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Materials Shares

Lynas shares charge higher on big news

What is getting investors excited today? Let's find out.

Read more »

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

Liontown Resources shares roar higher on big news

This lithium miner is catching the eye with some big news. Here's what is happening.

Read more »

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

What does Macquarie think BHP shares are worth?

Is now a good time to buy the miner's shares? Let's find out.

Read more »

Middle age caucasian man smiling confident drinking coffee at home.
Materials Shares

What does Macquarie think Pilbara Minerals shares are worth?

Is this lithium miner dirt cheap? Let's find out.

Read more »

Two miners standing together.
Materials Shares

Is it time to buy this beaten down lithium share?

This diversified miner’s share price has been hit on multiple fronts. What does it mean for investors?

Read more »