Down 18% in a month, is the Piedmont Lithium share price a buy?

The share has been beaten down lately.

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Key points

  • Piedmont shares have been beaten down lately and now trade 18% lower in a month 
  • Broker sentiment is still constructive, despite the market's continued volatility 
  • In the last 12 months, the Piedmont share price has slipped more than 22% into the red 

The Piedmont Lithium Inc (ASX: PLL) share price has slipped 18% lower in the past month of trade.

The loss reverses a strong period in May for the share. Investors thrust it off a low point of 65 cents on 12 May before finishing the month at 93.5 cents.

Before the open on Wednesday, the Piedmont Lithium share price is set to fetch 69.5 cents apiece.

Is Piedmont a buy?

The price of lithium carbonate has remained buoyant in June. It currently fetches US$71,380 per tonne after curling back up in recent weeks.

Amid the market volatility, lithium shares have been hit some of the hardest. Following a bearish note from Goldman Sachs on the sector, investors sold off lithium stocks at pace.

Despite this, Piedmont still has buy ratings from 9 brokers in May, including JP Morgan and Canaccord Genuity, per Bloomberg data.

With respect to Piedmont’s US listing (NASDAQ: PLL), JP Morgan values the share at a premium US$92 apiece. It currently trades at US$49.10.

Regarding Piedmont, it said:

PLL is a pre-production lithium company that is working to develop four key projects – Carolina Lithium, Abitibi Hub, Atlantic Lithium, and a 2nd Hydroxide Plant – that we think should all see positive developments this year.

Once these projects are completed, PLL should be a low cost producer of both spodumene (preferred feedstock for lithium hydroxide) and lithium hydroxide (required for long-range EV batteries).

Piedmont’s advantageous sustainability footprint, location, and ability to expand production over time should make it a very attractive partner for companies within the EV supplychain and support Piedmont as it looks to secure the additional funds needed to complete its project.

What the broker hasn’t mentioned, however, is the current systematic risks that keep being priced in by the market.

Piedmont is also set to produce lithium in the first half of 2023. There’s no certainty on what prices will be by then.

In the last 12 months, the Piedmont share price has slipped more than 22% into the red.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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