Why did the Allkem share price soar 60% in FY22?

The Allkem Ltd (ASX: AKE) share price surged overall in the financial year despite a tough June.

The lithium explorer’s share price leapt 59.8% from $6.45 at market open on 1 July 2021 to $10.31 at market close on 30 June. In today’s trade, the Allkem share price is currently rising 5.94% at $10.53.

Let’s take a look at how the Allkem share price performed in the 2022 financial year.

How did the year pan out?

The Allkem share price hit a financial year high of $14.01 on 27 May before descending in June.

Allkem is a global lithium explorer with a wide range of projects in Western Australia, Argentina, Japan and Quebec.

The company’s shares surged in November to $10.08 after the company’s AGM. In this update, Allkem, then known as Orocobre, advised that lithium demand was expected to grow until 2040.

In December, Allkem was added to the ASX 100 index in a quarterly rebalance. Shares jumped on the back of this news. The company also changed its name from Orocobre to Allkem.

In January, Ord Minnett downgraded the Alkem share price from a buy to accumulate with a $12.50 price target.

Broker updates were more positive for Allkem in February. Morgans placed a $14.83 price target on Allkem in March, due to predictions of strong earnings growth in the future. Bell Potter also predicted the company’s share price could double. The broker was positive on the outlook of lithium prices.

In February, Allkem shares leapt on the back of the company’s half year results. Allkem reported US$192.3 million of revenue in the first half of the year. The Olaroz project in Argentina saw a 142% boost in revenue.

In early April, Allkem shares were on the rise amid news from the company’s Argentina operations. The Olaroz resource increased from 6.4 to 16.2 million tonnes of lithium carbonate equivalent (LCE). Meanwhile, at Sal de Vida, Allkem expanded future capacity to 45,000 tonnes per annum (tpa).

Investors appeared to respond well to Allkem’s quarterly update in April. The Mt Cattlin and Olaroz operations both achieved record revenue. The company reported revenue of US$235 million and a gross operating cash margin of US$189 million in the third quarter.

In May, the Allkem share price benefited from positive broker coverage. Morgans placed a $16.98 price target on the company’s shares with an add rating. At the time, analysts said:

AKE has been a strong performer in recent weeks but we continue to see long term valuation upside with persistent tightness in the lithium market.

June was a tough month for the Allkem share price. However, it was not alone in the lithium sector. Lake Resources N.L. (ASX: LKE) shares slid 49%, while Core Lithium Ltd (ASX: CXO) shares fell 31%. A note out of Goldman Sachs predicting lithium demand to fall weighed on ASX lithium shares.

Allkem share price summary

Allkem shares have jumped 56% in a year and 1% year to date.

In contrast, the S&P/ASX 200 Materials Index (ASX: XMJ) has fallen 11% in a year and 8% year to date.

The company has a market capitalisation of about $6.71 billion based on its current share price.

The post Why did the Allkem share price soar 60% in FY22? appeared first on The Motley Fool Australia.

(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(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Here are the top 10 ASX shares today
• Is now the time to be buying beaten down ASX 200 mining shares?
• Can ASX lithium shares recharge in FY23?
• ASX lithium stocks avoid share price shock amid commodities lashing
• Down 25% in a month, what is the outlook for the Allkem share price in July?

Motley Fool contributor Monica O’Shea 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.

from The Motley Fool Australia https://ift.tt/N9b4qEI