Bell Potter has finally revised PLS's financial model projections to downgrade SC prices
Lithium price outlook downgraded
We have downgraded our lithium price outlook: Spodumene concentrate 6% Li2O now US$1,050/t in 2025 (previously US$1,400/t) trending higher to LT US$1,500/t in 2028 (previously US$1,600/t); Lithium carbonate now US$12,500/t in 2025 (previously US$20,000/t) trending higher to LT US$20,000/t in 2028 (previously US$22,500/t). The downgrades are based on our updated lithium supply-demand outlook, now expecting supply deficits to emerge in 2027 (previously 2026). The result is marginal cost supported prices over 2025 before higher incentive prices from 2026
So PLS is projected to make just a maiden profit of $47mil in FY25 at the projected SC6 price of just over US $1000. So an improvement from $770-780 level today to $1000 is still not good enough for PLS. At today's market valuation of $8.094B, it is presently trading at a whopping PE multiple of 172x.
And if optimistic Bell Potter can be positive to forecast a $1150 SC6 price for 2026 assuming no recession, for current valuation of $8B, that gives an FY2026 PE forecast of 51.8x which is still very expensive, provided however
1. No recession throughout 2024-2026
2. SC6 price can scale higher from $770 to $1150 by 2026
Based on this, the upside potential IMO for PLS is limited, and the only factor underpinning this monstrous $8Bil market valuation is hope that the market sees another takeover offer similar to Rio's for Arcadium.
