The Pilbara Minerals Ltd (ASX: PLS) share price has been pushed lower by the market this year. But, could the lithium miner actually be a smart investment at these prices?
To put it into context, the Pilbara Minerals share price has dropped by around 42% since the beginning of 2022. However, despite that large decline, Pilbara shares are still up around 50% over the past 12 months.
Like many other ASX growth shares, Pilbara Minerals shares have dropped over the last few months as investors grapple with rising inflation and the steps that central banks are taking to try to bring it under control.
What’s the latest from Pilbara Minerals?
Commodity prices are an important part of the picture for resource companies. They heavily influence how much revenue (and therefore profit) a commodity business can make.
Pilbara Minerals recently announced the result of its fifth Battery Material Exchange (BMX) spodumene concentrate digital auction.
Pilbara presented a cargo of 5,000 dmt at a target grade of around 5.5% lithia for sale on the platform.
The company noted “strong interest” in both participation and bidding by a “broad” range of players.
It said that it intended to accept the highest bid of US$5,955 per dry metric tonne. On a pro-rata basis for lithia content, this equated to a price of approximately US$6,586 per dry metric tonne.
The company also recently announced that key commercial terms had been agreed upon for a joint venture with Calix Ltd (ASX: CXL). This followed the award of a A$20 million Federal Government grant as part of the modern manufacturing initiative. This is for the future development of a demonstration plant, as well as the potential future commercialisation of the mid-stream project process.
The company also announced at the start of June 2022 that Dale Henderson would be the company’s new managing director and CEO. He had been the chief operating officer since 2017.
Top broker Macquarie currently rates Pilbara Minerals as a buy with a share price target of $4. That implies a possible rise of almost 100%.
Macquarie values the Pilbara Minerals share price below 6x FY23’s estimated earnings.
Citi is another broker that rates the Pilbara Minerals a buy with a price target of $3.60. That implies a possible rise of around 75% over the next year. The broker likes the business amid the strength of the lithium price.
Ord Minnett is a third broker that rates Pilbara Minerals as a buy with a share price target of $4.25. That implies a possible rise of around 110%. The broker noted that Pilbara’s operations have been hit by COVID-19. However, the strength in lithium prices is keeping it interested in the business.
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