Top broker tips Allkem (ASX:AKE) share price to shoot 20% higher

Allkem could be a lithium share to buy according to one leading broker…

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Key points

  • Allkem has been upgraded to a buy rating by analysts at Morgans
  • The broker sees 20% upside from current levels
  • Allkem is the broker’s top pick in the sector

The Allkem Ltd (ASX: AKE) share price is pushing higher again on Thursday.

In afternoon trade, the lithium miner’s shares are up 2% to $11.03.

This means the Allkem share price is now up 93% over the last 12 months.

Why is the Allkem share price pushing higher today?

The catalyst for the rise in the Allkem share price on Thursday has been a broker note out of Morgans this morning.

According to the note, the broker has upgraded the company’s shares to an add rating and lifted its price target on them to $13.25.

Based on the current Allkem share price, this implies potential upside of 20% over the next 12 months.

What did the broker say?

Morgans has been looking at the lithium sector and notes that spot lithium prices have hit new records and are putting pressure on contract prices.

Its preferred pick for lithium exposure is Allkem. This is due to its near term exposure sky high prices for the battery making ingredient and its long production growth runway.

The broker said: “Our preferred stock for lithium exposure, Allkem (AKE). AKE announced a 68% qoq increase in revenue at Olaroz and a 7% CY21 beat of production guidance at Mt Cattlin with large increases in realised prices at both projects. AKE expects USD20k/t for lithium carbonate sales in 2HFY22 at Olaroz. Production growth continues with Naraha commissioning, progress on Sal de Vida and FID expected on James Bay in 2QCY22. Construction is expected to commence the following quarter.”

All in all, this could make Allkem a lithium share to buy in 2022 according to the team at Morgans.

Should you invest $1,000 in Allkem right now?

Before you consider Allkem, 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 wasn't one of them.

The online investing service he’s 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.

*Returns as of January 13th 2022

Motley Fool contributor James Mickleboro owns Orocobre Limited. 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 Bruce Jackson.

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