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Investing.com - Goldman Sachs downgraded Pilbara Minerals Ltd (ASX:PLS) from Neutral to Sell on Thursday, while reducing its price target to AUD1.10 from AUD1.75.
The investment bank cited concerns about Pilbara’s negative free cash flow after accounting for growth expenditures, noting that cash preservation and cost optimization will likely remain key priorities for the company.
Goldman Sachs indicated that Pilbara might need to reduce mining rates and costs while increasing stockpile treatment to minimize cash outflows as its net cash position continues to decline.
The downgrade reflects Goldman’s assessment that Pilbara faces a relatively weaker outlook compared to its industry peers in the current market environment.
The firm also suggested that further counter-cyclical mergers and acquisitions or share buybacks from Pilbara are unlikely given the company’s cash flow challenges.
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