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

How did the 2022 financial year pan out for Allkem?

| More on:
asx share price increase represented by golden dollar sign rocketing out from white domes of lithium

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Allkem share price exploded 60% during the financial year 
  • Positive broker outlook for lithium supply and strong financial results appeared to help Allkem shares rise 
  • Allkem is a global company with lithium projects all over the world 

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.

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.

More on Materials Shares

A young man stands facing the camera and scratching his head with the other hand held upwards wondering if he should buy Whitehaven Coal shares
Materials Shares

Why are Rio Tinto shares sinking today?

Let's see what is weighing on this mining giant's shares today.

Read more »

woman's reflection looking through binoculars
Materials Shares

Where does Macquarie see value amongst ASX lithium shares?

The broker has been running the rule over the lithium industry.

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Materials Shares

Why are Liontown shares rocketing 25% to a 52-week high?

This lithium miner is having a day to remember on Monday.

Read more »

A mining worker clenches his fists celebrating success at sunset in the mine.
Resources Shares

ASX 200 mining shares rip amid one of the strongest rallies for the materials sector in months

Mining shares powered the ASX 200 materials sector higher last week in one of its strongest rallies in months.

Read more »

A man holds a Chinese flag and give the thumbs up, indicating approval for Chinese shares trading on US stock market
Materials Shares

Fortescue shares push higher on big China news

Let's see what this mining giant has announced this morning.

Read more »

A man reacts with surprise when her see a bargain price on his phone.
Materials Shares

Broker tips 50-60% upside for two ASX materials shares

Here are two materials shares to consider for your portfolio 

Read more »

A cartoon drawing of a battery with arms, legs and a sad face slumping foraward and looking despondent.
Materials Shares

Why this expert is calling time on Core Lithium shares

A leading expert delivers his verdict on the outlook for Core Lithium shares.

Read more »

Happy man in high vis vest and hard hat holds his arms up with fists clenched celebrating the rising Fortescue share price
Materials Shares

Why did the BHP share price jump in July?

Let's see why the Big Australian outperformed the market last month.

Read more »