Pilbara Minerals Ltd (ASX: PLS) shares are starting the week in a reasonably positive fashion.
At the time of writing, the lithium miner's shares are up 0.65% to $3.85.
Can its shares keep rising from here? Let's see what analysts are saying about the miner following the release of its quarterly update last week.
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Are Pilbara Minerals shares good value?
Unfortunately, the broker community has become a little more bearish on the miner since the release of its update.
In fact, it has just lost one of its only bulls – Morgans. This morning, its analysts have downgraded the company's shares from an add rating to a hold rating with a reduced price target of $4.10.
While this still implies a potential upside of approximately 6.5%, it isn't a sufficient enough risk/reward to justify a better rating.
Over at Bell Potter, its team has retained its hold rating with a $3.60 price target. It said that it is "confident that EV-led demand will see strong long-term lithium market fundamentals" but its analysts "view PLS as fully valued at current levels."
Elsewhere, analysts at Citi and Morgan Stanley have held firm with their sell ratings and $3.60 and $3.30 price targets, respectively.
But the most bearish broker appears to be Goldman Sachs, which is warning investors to stay well clear of Pilbara Minerals shares. Particularly if you were hoping to receive a dividend in 2024.
Bearish broker
According to the note, the broker has reiterated its sell rating and cut its price target down to $2.80.
Based on its current share price, this implies a potential downside of 27% for investors over the next 12 months.
Commenting on the miner's dividend, the broker said:
PLS' net cash declined to A$1.4bn (from ~A$1.8bn) and has almost halved over the last 6 months (partly on catch up FY23 tax in the Dec-23 quarter). As a result, we see a FY24 final dividend as increasingly unlikely (prior GSe ~A2cps) given capital spend, realised lithium pricing challenges, and PLS having already deferred non-essential spend/the 1H dividend to preserve a balance sheet advantage (though expect dividends to return with the FY25 interim result). We note that on our numbers, both before/after including a Beyond P1000 expansion, net cash troughs at ~A$0.8-0.9bn (before likely longer dated downstream capex).
It then adds:
Our 12m PT is down to A$2.80/sh, where PLS (Sell) remains at a premium to peers (1.2x NAV & pricing ~US$1,300/t LT spodumene (including a nominal value of A$1.1bn for growth); peer average ~1.05x & ~US$1,210/t (lithium pure-plays ~US$1,110/t; GSe US$1,150/t LT real)), with near-term FCF continuing to decline on lithium prices and increasing growth spend (c.-10% FCF yield in FY24E, and c.0% in FY25-27E). We also continue to see risk that a Beyond P1000 expansion disappoints vs. market expectations on a combination of capex, size, or timing.
