The Allkem Ltd (ASX: AKE) share price has been a bright spot in the S&P/ASX 200 Index (ASX: XJO) this year.
While many ASX 200 shares have trudged lower, the Allkem share price has surged 34% since the beginning of the year as ASX lithium shares continue to steal the spotlight.
The attention will stay on Allkem next week as the company holds its 2022 annual general meeting (AGM) on Tuesday.
With proceedings kicking off at 10.30am, shareholders will be able to attend this AGM either virtually or in person at the Museum of Sydney.
In the meantime, let's see what leading brokers think about the Allkem share price.
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Is the Allkem share price a buy?
Analysts at Macquarie are fighting for the bulls. The broker currently has an outperform rating on Allkem shares, with a price target of $21.00. This implies potential upside of 40% over the next 12 months.
Macquarie notes that Allkem is planning to triple its production by 2026 to 120 kilotonnes per annum and there are a number of studies underway to increase volumes further. What's more, in Macquarie's eyes, buoyant lithium prices continue to drive material upside.
Bell Potter is another broker siding with the bulls. After digesting Allkem's first-quarter results, Bell Potter retained its buy rating and slightly trimmed its price target to $19.45. This implies potential upside of 30% over the next 12 months.
On the back of ongoing strength in lithium demand, commodity prices, and production growth, the broker expects Allkem's cash generation to lift substantially into 2023.
Summarising its positive view, Bell Potter noted:
AKE is aiming to maintain 10% share of supply in a global lithium market experiencing unprecedented growth; it has a portfolio of growth projects, balance sheet strength and cash flow from existing projects to achieve this. AKE's portfolio is also diversified across lithium commodity, mode of production, asset location and end-user country.
Has the Allkem share price peaked?
While Macquarie and Bell Potter are bullish on Allkem shares, Morgans remains sceptical.
Its analysts weren't impressed with Allkem's latest quarterly update. As a result, Morgans retained its hold rating on Allkem shares and trimmed its price target to $15, in line with where shares sit today.
The broker acknowledges that Allkem is a well-diversified lithium producer across different products and geographies. It also believes Allkem will outperform its peers over the cycle. However, summarising its cautious view, Morgans concluded:
…it's not clear to us whether or not there will be shorter term interruptions to the likely long term uptrend in lithium demand that means there could be a better entry point. Given the stock's previous sensitivity to the outlook for lithium prices and, in our view, the potential for prices to move away from their recent new found highs, we maintain our HOLD rating.
Allkem share price snapshot
Investors last heard from Allkem when the ASX lithium share released its first-quarter results last month. So, instead of a trading update, next week's AGM could focus on the company's strategy and outlook.
It's been a bumper year for the Allkem share price, with shares rocketing by 58% over the last 12 months.
Allkem is one of the largest lithium miners in the world. And it's the second-largest lithium share on the ASX, commanding a market capitalisation of $9.5 billion.
Holding the top spot is Pilbara Minerals Ltd (ASX: PLS), which currently boasts a market cap of $15.5 billion.
