Allkem Ltd (ASX: AKE) shares are down 2.9% to $1370 in early afternoon trading on Thursday.
But over the course of 2023, the ASX lithium share has been gradually rising and is up 24% overall.
Is it too late to buy?
Are Allkem shares a buy at today's price level?
Well, top broker Goldman Sachs thinks so.
The broker retained its buy rating on Allkem shares after the company reported its FY23 results.
The miner revealed a group net profit after tax (NPAT) of US$525 million, up 57% on FY22.
Goldman thinks the Allkem share price will grow from here.
It's placed a 12-month price target of $17.20 on Allkem shares.
HSBC also has a buy rating on Allkem shares with a share price target of $17.30.
This implies a potential upside of 26% for ASX investors who buy the miner today.
Bell Potter is more bullish with its buy rating plus a $19 share price target.
That implies a potential 39% upside.
Citi has a similar price target of $18.50 on Allkem shares.
What's going to happen with lithium prices?
As my Fool colleague James reports, Goldman predicts a pretty steep fall in all types of lithium commodity prices from here over the next few years.
This is important because commodity prices directly affect the share prices of companies like Allkem.
For example, Goldman is tipping that the lithium carbonate price will fall from about US$25,000 per tonne today to US$15,331 in 2024, US$11,000 in 2025, and US$16,883 in 2026.
According to an analysis published on Trading Economics, there are "compounding signs of low demand".
The analysis explains:
Battery manufacturers for new energy vehicles phased out buying activity since the start of the third quarter as their input inventories filled up and funds from previous government-led subsidies dried.
The concerning macroeconomic backdrop for the Chinese economy also translated to low consumer spending for electric automobiles …
Despite a 32% year-on-year growth in new energy vehicle sales during the period, reports showed that over 10 Chinese new-energy vehicle producers offered new rounds of price cuts to meet second-half sales targets.
The lithium carbonate spot price has fallen by more than 60% since the beginning of the year.
Strong lithium prices contributed to Allkem's FY23 profit boost. The company reported an average realised price for lithium carbonate of US$43,981 per tonne in FY23 — almost double that of FY22.
