Macquarie tips 100% total return from Pilbara Minerals shares

A woman's hair is blown back and her face is in shock at this big news.

A woman's hair is blown back and her face is in shock at this big news.

The Pilbara Minerals Ltd (ASX: PLS) share price has started the week in a disappointing fashion.

Although the market is charging higher, it has well and truly left the lithium miner’s shares behind.

This has seen Pilbara Minerals shares fall over 2% to $4.08.

Is this a buying opportunity?

While opinion is divided on where lithium prices are heading, one leading broker that remains positive on the battery making ingredient is Macquarie.

In fact, it expects prices to remain strong enough for Pilbara Minerals to be swimming in cash in the next couple of years.

And with the company’s new dividend policy in place, the broker believes this will underpin dividends of 45 cents per share in FY 2023 and 34 cents per share in FY 2024.

Based on the current Pilbara Minerals share price, this equates to huge yields of 11% and 8.3%, respectively.

It’s no wonder then that Macquarie has the equivalent of a buy rating on its shares.

Pilbara Minerals share price tipped to climb

But the yields aren’t the only thing to get excited about.

Macquarie also has an outperform rating and lofty $7.70 price target on the lithium giant’s shares. This implies potential upside of almost 90% for the Pilbara Minerals share price over the next 12 months.

Which, combined with the broker’s dividend forecast, suggests a 100% total return from the company’s shares between now and this time next year.

It is also worth noting that Macquarie isn’t the only bullish broker. The team at Morgans has an add rating and $5.30 price target, whereas analysts at Citi have a buy rating and $4.80 price target on its shares.

Commenting on lithium prices, Citi said:

On lithium pricing, PLS says the sky is not falling in. Many options to get its uncontracted tonnes to market. PLS elected to do tolling, which was unequivocally driven by value. […] Domestic pricing is a function of the slowdown in China market but would remind everyone of the structural shift that’s underway: more EVS, more investment. Long game remains positive. PLS says customers are asking for more tonnes and enquiries for spodumene volumes continue.

The post Macquarie tips 100% total return from Pilbara Minerals shares appeared first on The Motley Fool Australia.

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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.

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