Based on fundamental earnings potential and given the 6 month timeframe I think yours is a reasonable estimate.
I chose to go higher with mine at 95c because I have an ever growing appreciation for the level of hype and psychology that constitutes asx valuations.
As pricing is expected to show true signs of moving away from the cyclical bottom across all Li products in meaningful amounts that will approach incentive levels there is bound to be a great deal of early enthusiasm.
Company specific catalysts are the potential very near term acquisition of AJM's lithium operation ALO, and in any event the reduction in output available for the nonintegrated marketplace to which PLS sells it's spodumene product resulting from C&M of ALO. Having a competitor that shares a major offtake customer cease operating will add valuable negotiating leverage. Keep in mind that although Greenbushes supply affects Li chem pricing, it's output currently only serves the needs of Alb and Tianqi and as such Talison Spodumene products are not a direct PLS competitor.
The POSCO converter JV is also a potential catalyst within the tipping timeframe. This reminds me of the situation with Orocobre and the Naraha converter JV with Toyota Tsusho. It had numerous delays and many were speculating it had reached the point where it would never eventuate. Reality was that Toyota was controlling the timing and waiting for their anticipated needs and other downstream pieces of the puzzle to be signed off upon. POSCO has now announced significant investment to expand it's Cathode production facilities, so I assume the hold up has been timing construction of any Spodumene Converter to feed their downstream needs.
Sector wide I expect to see a controlled increase in Li product prices, while keeping in mind significant latent built capacity. We have witnessed extraordinary EV sales in Europe recently that has surprised many including myself that felt Covid would have a much greater impact, however government intervention to support uptake has worked wonders. Latest news out of the UK for 2030 removal of Petrol and Diesel new car sales will light a fire and there are rumours the EU could be even more aggressive with a 2025 timeframe.
A return to the ASX200 is certainly warranted IMO given MC and trade liquidity. Following years of a bear market for Li stocks heading into the cyclical bottom it is understandable that some may have concerns if a return to the 200 attracting unwanted attention from shorters. I do not share these concerns for companies on an upward trajectory.
I will repeat the point about latent production capacity being a major factor, particularly for spodumene supply with Greenbushes heavily moderating (I assume CGP2 is still not running), Wodgina on C&M, and PLS + GXY's Mt Cattlin still not operating near capacity. In the medium term there are many projects reliant on pricing to increase to incentive levels but it should not be underestimated how quickly new capacity can be brought online. I also believe the level of conversion capacity within China is underestimated by most investors.
I also compare some of the 6 month price estimates in this thread against the Market Cap of the industry Giants. Albemarle AFAIK has the greatest production capabilities and mining operations of the big players and following a significant run this year has a MC of US$13.15b and is closing in on it's all time high. So when I see some valuations for 6 months time being mooted at AU$4b+ it puts it in perspective.
It is such a fascinating industry in part due to the expectations of growth from the energy storage revolution and increasing investor interest in companies associated with positive environmental outcomes for the future.
It is these psychological factors that have lead me to post what I consider a very bullish 6 month target of 95c. This is still more than 50% upside to the current SP.
The near to medium term outlook for earnings taken in isolation would have me suggesting a price target for the tipping competition lower than yours @Langleybc ... however the asx doesn't work that way.
Growth and a positive narrative have major impact on asx valuations. People post of FA and TA however perhaps the most important is the psychological factor.
Best of luck.
PLS Price at posting:
60.0¢ Sentiment: Buy Disclosure: Held
(20min delay)