The Pilbara Minerals Ltd (ASX: PLS) share price is out of form on Thursday.
In afternoon trade, the lithium minerâs shares are down almost 5% to $4.49.
Why is the Pilbara Minerals share price sinking?
Pilbara Minerals shares could be falling today because of a broker note out of Goldman Sachs this morning.
That note has warned investors that lithium prices could be heading materially lower from the second half of calendar year 2023.
Hereâs a summary of what Goldman Sachs’ team is expecting from spodumene (6% grade) prices:
- 2022 US$4,233
- 2023 US$4,330
- 2024 US$800
- 2025 US$800
This is expected to be driven by a significant increase in production globally. In fact, the broker estimates that by 2025, global lithium demand will grow to ~1,300kt LCE but lithium production will increase to ~1,700kt LCE.
Are its shares good value now?
Unfortunately, Goldman Sachs doesnât see enough value in the Pilbara Minerals share price to recommend it as a buy.
According to the note, the broker has initiated coverage on its shares with a neutral rating and $4.50 price target. This is broadly in line with where Pilbara Minerals shares have fallen to this afternoon.
It commented:
We are Neutral-rated on PLS as we see incremental capex spend and near time prices which are supportive of strong FCF yield more than priced into the stock and it is trading broadly in line with peers.
While near-term prices support a strong c. 10-15% FCF yield over and above planned incremental capex spend, we see this as priced in trading at 1.3x NAV on GSe LT US$1,000/t spodumene (peer average 1.3x) implying current pricing persists for ~2 years.
The post Why is the Pilbara Minerals share price having such a shocker on Thursday? appeared first on The Motley Fool Australia.
FREE Investing Guide for Beginners
Despite what some people may say – we believe investing in shares doesn’t have to be overwhelming or complicated…
For over a decade, we’ve been helping everyday Aussies get started on their journey.
And to help even more people cut through some of the confusion “experts’” seem to want to perpetuate – we’ve created a brand-new “how to” guide.
Yes, Claim my FREE copy!
*Returns as of November 7 2022
(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}
setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()
More reading
- Here’s the lithium price forecast through to 2025
- ‘Lithium investment is really just beginning’: KPMG
- Here are the top 10 ASX 200 shares today
- Here are the 3 most heavily traded ASX 200 shares on Wednesday
- Here are the 3 most heavily traded ASX 200 shares on Tuesday
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.
from The Motley Fool Australia https://ift.tt/jKtDXEi
Leave a Reply