Citi analysts have reduced their earnings expectations for Australian lithium companies.

They predict that lithium prices will maintain a steady level for the next 12 to 18 months, and are bearish on the near-term outlook for the commodity.

Citi has lowered the price target for Pilbara Minerals (ASX:PLS) by 20 Australian cents per share, bringing it to A$4.50 per share.

In addition, they have made revisions to the price target on IGO (ASX:IGO), reducing it to A$13 per share from A$15.50.

Core Lithium (ASX:CXO) has also been adjusted in Citi’s rating, dropping from a ‘neutral’ to a ‘sell’.

The firm reports that the demand for electric vehicles has failed to meet high expectations, largely due to an increase in supply.

Despite the current bearish sentiment, Citi remains optimistic about the long-term prospects for lithium.

Citi has highlighted Pilbara Minerals and Allkem (ASX:AKE) as its sector picks, pointing out that Allkem represents the most promising growth outlook.

Pilbara Minerals (ASX:PLS) is a mineral exploration company with a primary focus on lithium and tantalum, based in Australia.