Shares of Pilbara Minerals Ltd (ASX: PLS) plummeted 5.45% in intraday trading on Wednesday, as investors reacted to Citi's downward revision of its price target for the Australian lithium miner. The stock's decline comes amid growing concerns over potential U.S. reciprocal tariffs, which are expected to create headwinds for lithium demand.

Citi analysts cut their price target for Pilbara Minerals from A$2.40 to A$1.65, citing the challenging near-to-medium term outlook for lithium prices. The investment bank noted that without significant development of a resilient ex-China supply chain and associated demand, lithium prices are likely to trade below long-run incentive prices in the foreseeable future.

Despite the price target reduction, Citi upgraded its rating for Pilbara Minerals to "buy" from "neutral," selecting it as the top pick among lithium companies. The bank highlighted the potential for free cash flow generation following the completion of Pilbara Minerals' P1000 expansion project at its Pilgangoora operation this fiscal year. This optimism, however, was not enough to prevent the stock's sharp decline as investors focused on the immediate concerns surrounding U.S. tariffs and their potential impact on the lithium market.