On Friday, Piedmont Lithium (NASDAQ:PLL) received a downgrade from BTIG from Buy to Neutral. The change in rating comes as the company, which has already begun generating revenue with its first cargo sold in the third quarter of 2023, faces a 50% decline in its stock year-to-date. This drop is in contrast to other lithium companies that have not yet generated revenue.
Piedmont Lithium's performance has been impacted by a slower pace of electric vehicle (EV) adoption in North America and a more gradual increase in battery storage demand than anticipated. These factors are contributing to a predicted near-term weakness in lithium prices. Lithium hydroxide prices have recently seemed to stabilize in the range of $11,000 to $12,000 per ton, after a significant decline of over 80% in the past year.
The firm's outlook for lithium prices remains flat for this year, with expectations of a rebound in the next year, projecting an average price of $16,000 to $18,000 per ton. The challenging market conditions have led to the downgrade, although BTIG indicates a potential shift in sentiment towards Piedmont Lithium later this year or early next year. This change would be in response to an anticipated increase in lithium demand as battery manufacturers aim to replenish their inventories.
Several potential catalysts could positively influence Piedmont Lithium's prospects, including an update on the North American Lithium (NAL) project in Canada, securing additional supply contracts, and progress on various permitting and development milestones. These include the Final Investment Decision (FID) for operations in Ghana slated for 2025, the completion of permits for the Carolina Lithium project, and the potential for non-dilutive financing, such as the Department of Energy's Advanced Technology Vehicles Manufacturing (ATVM) loan application.
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