The Allkem Ltd (ASX: AKE) share price is having a strong session.
In morning trade, the lithium minerâs shares are up over 3% to $10.62.
However, despite this, the Allkem share price remains down materially from its record high of $16.75.
Can the Allkem share price keep rising?
The good news is that despite being bearish on lithium prices and forecasting them to pullback significantly next year, Goldman Sachs is very bullish on Allkemâs shares.
This is due to its belief that the companyâs production growth and downstream optionality will keep its earnings strong and offset the pressure caused by lower lithium prices.
According to a note from Monday, its analysts have retained their buy rating and $15.40 price target on its shares. This implies potential upside of 45% for investors from current levels over the next 12 months.
Commenting on its production growth, the broker said:
Allkem has one of the best production outlooks in our lithium coverage, with broad-based growth optionality, second only to Mineral Resources on an LCE basis when including downstream hydroxide production on an equity basis. This drives our forecast for the companyâs equity LCE production growth of >4x by FY27E, supporting earnings rebounding to near current record levels despite the declining lithium price environment.
In addition, the broker highlights that the market is undervaluing its assets. This is despite its competitive brine cost curve position. It adds:
Allkem has the largest lithium metal contained resource base amongst our coverage when factoring in South American brine assets and second largest reserve (excluding Olaroz due to ongoing reserve re-modelling). However, AKEâs aggregate resource is trading at a significant discount to peers, despite a competitive brine cost curve position.
All in all, Goldman appears to see recent weakness in the Allkem share price as a great buying opportunity for investors.
The post Allkem share price can jump 45% even if lithium prices fall: Goldman Sachs appeared first on The Motley Fool Australia.
Should you invest $1,000 in Allkem Limited right now?
Before you consider Allkem Limited, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Allkem Limited wasn’t one of them.
The online investing service heâs run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
See The 5 Stocks
*Returns as of March 1 2023
(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}
setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()
More reading
- These ASX lithium shares are a buy despite explosive supply forecast: UBS
- Leading brokers name 3 ASX shares to buy today
- Why are ASX 200 lithium shares falling so hard today?
- Top brokers name 3 ASX shares to buy next week
- Here are the top 10 ASX 200 shares today
Motley Fool contributor James Mickleboro has positions in Allkem. 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.
from The Motley Fool Australia https://ift.tt/9D2uEvZ
Leave a Reply