Morgans still sees 'value upside' in Allkem share price despite recent rally

Allkem shares have rallied strongly but could keep rising…

| More on:

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

The Allkem Ltd (ASX: AKE) share price was a very strong performer last week.

The lithium giant's shares rallied an impressive 15% higher over the five days.

This means that the Allkem share price is now up almost 60% since this time last year.

woman with coffee on phone with Tesla

Image source: Getty Images

Can the Allkem share price continue its ascent?

The good news is that a number of brokers still believe the company's shares can keep climbing from here.

For example, according to a note out of Morgans, its analysts have retained their add rating with a slightly trimmed price target of $15.40.

Based on the current Allkem share price, this implies potential upside of 11% for investors over the next 12 months.

What did the broker say?

Morgans was pleased with Allkem's performance in FY 2022. It notes that the company's "FY22 net profit beat was in-line with our forecast (+1%) despite a miss at the EBITDAIX level."

And while it acknowledges that the company's outlook was a bit of a mixed bag, with production downgraded at Mt Cattlin but stronger prices for Olaroz, it saw enough to remain bullish.

Looking ahead, the broker sees plenty of growth avenues and is forecasting strong cash flow generation again in FY 2023. Morgans concludes:

We still see value upside at today's closing price despite the recent rally. If AKE can provide more detail on its potential future expansion projects like Olaroz S3 and the potential downstream projects for James Bay then we think the market is likely to allow for further growth. We maintain our ADD rating with 12% [now 11%] upside to our target price. Despite the large increases in cash flow we don't expect AKE to commence paying a dividend in FY23 while its capital expenditure is elevated.

More on Broker Notes

Man sits smiling at a computer showing graphs.
Broker Notes

6 ASX 200 shares with strengthened buy ratings this week

Brokers have maintained confidence in these ASX 200 stocks amid today's volatile market conditions.

Read more »

A happy person clenching fists in celebration sitting at computer.
Broker Notes

Morgans says hold BHP shares and buy this ASX 200 stock      

Let's see what the broker is saying about these stocks this week.

Read more »

An ASX 200 market analyst holds his hand to his chin and looks closely at his computer screens watching share price movements
Broker Notes

3 ASX 200 shares just upgraded to strong buy — here's what the brokers are saying

Do any of these ASX 200 stocks appeal to you?

Read more »

Person pressing the buy button on a smartphone.
Broker Notes

3 reasons to buy Pro Medicus shares today

A leading analyst believes Pro Medicus shares are now trading at a significant discount.

Read more »

Two men look excited on the trading floor as they hold telephones to their ears and one points upwards.
Broker Notes

Buy, hold, sell: Sigma Healthcare, Macquarie, Santos shares

Brokers reveal their latest ratings and reviews on 3 ASX 200 stocks.

Read more »

A man rests his chin in his hands, pondering what is the answer?
Broker Notes

Buy, hold, sell: Macquarie, Boss Energy, CBA shares

The market looks set to endure a sixth consecutive day in the red.

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Broker Notes

Guess which ASX 200 share could rise 90% according to Bell Potter

Let's see what the broker is saying about this stock this week.

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Broker Notes

These ASX 200 shares could rise 25% to 70%

Morgans expects big returns from these top stocks.

Read more »