Up 30% in a month, has the Allkem share price run its course?

Have Allkem's shares finally peaked?

The Allkem Ltd (ASX: AKE) share price has been in sensational form in recent weeks.

This morning the lithium miner's shares have risen a further 3.5% to a record high of $15.71.

This means the Allkem share price is now up 30% since this time last month.

Four investors stand in a line holding cash fanned in their hands with thoughtful looks on their faces.

Image source: Getty Images

Has the Allkem share price peaked?

One broker that believes the Allkem share price may have peaked for the time being is Morgans.

According to a note, the broker has downgraded the company's shares to a hold rating with a $15.40 price target.

This is broadly in line with where its shares are trading today.

What did the broker say?

Morgans remains very positive on the company's future. However, with Allkem's shares "trading very close" to its price target and its belief that lithium prices are close to reaching a top, the broker has decided to downgrade Allkem on valuation grounds. It explained:

We still think AKE is one of the best lithium pure plays on the market. However, after such a strong run since the full year result and with no additional announcements we think it's time for investors to re-evaluate whether they continue to increase their position. Given only 2% potential upside to our price target at today's close we reduce our rating to HOLD.

It's possible that contract prices for carbonate continue to increase but we think substantial increases are less likely. […] Despite the ongoing acute shortage of lithium products amid high demand for EVs we continue to expect that prices will moderate over the next 1-2 years. We have seen the market react quickly when it anticipates weaker commodity prices and AKE's share price is highly sensitive to expectations for lithium pricing.

Not everyone agrees with this view, though. Last week, Macquarie reiterated its outperform rating and $21.00 price target on Allkem's shares. Time will tell, which broker made the right call.

Motley Fool contributor James Mickleboro has positions in Allkem 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 Scott Phillips.

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