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The Pilbara Minerals Ltd (ASX: PLS) share price has been boosted after the ASX lithium share received an upgrade from a broker.

The business has seen plenty of volatilityover the last 12 months and it's currently near a 12-month low. When prices change, analysts and investors may see value – it could lead to someone adjusting their opinion that something was overvalued to undervalued.

A broker has recently upgraded their rating on whether they think the ASX lithium share is worth owning or not.

Pilbara Minerals shares rated as a buy

According to reporting by The Australian, the business has been upgraded to a buy by the broker Citi.

A price target is where the broker thinks the company's share price will be trading in 12 months from the time of the recommendation. Citi's price target on Pilbara Minerals shares is $4.50 – this implies that the ASX lithium share could rise by approximately 20% in the next year if the broker is correct.

The company was last trading at that price in September around a month ago, so it certainly doesn't seem like an outrageously bullish call.

Why has the ASX lithium share fallen so far?

The short-term success of ASX mining shares is heavily linked to the commodity price that they are involved in.

If the resource price falls, then this suggests the business is going to be seeing less revenue and lower earnings in future results.

The lithium price has fallen quite heavily in recent times due to fears about Chinese demand for lithium, with the lithium carbonate price approximately halving since June.

It's understandable why investors would be concerned about the lithium price because that could lead to a substantial drop in profit for 2024.

Mining costs don't usually change much each month, so a rise in revenue can largely translate into profit growth, but a decline in revenue predominately comes straight off profit.

Currently on Commsec, the projection is that the ASX lithium share could generate 45.2 cents per share, which would put the Pilbara Minerals share price at less than 9 times FY24's estimated earnings.
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