Allkem Ltd (ASX: AKE) shares are down 17.71% in a month, closing at $11.52 per share yesterday.
Is this a prime buy-the-dip opportunity?
Let's see what the experts say.
Are Allkem shares a buy?
A number of brokers have commented on Allkem shares in the past fortnight.
Morgans says buy
Morgans has put an add rating on Allkem shares with an improved price target of $15.30.
Analyst Max Vickerson said:
Recent share price weakness means we see significant upside and upgrade our rating to 'add'.
Allkem announced a range of cost increases across its portfolio of growth projects, whilst the company has also increased its long-term commodity price assumptions, boosting its estimated project values.
Offsetting this, we now include Cauchari in our valuation which lifts our price target… after factoring in higher costs in James Bay and Sal de Vida.
We note the higher risk for Allkem with a valuation dependent upon successfully delivering significant growth.
Macquarie tips 100% to 160% upside
Macquarie says Allkem and fellow ASX lithium shares Mineral Resources and Pilbara Minerals could have share price upside potential of between 100% to 160%.
In The Australian on Wednesday, Macquarie commented:
We see value in both Allkem and Liontown Resources, with Allkem offering unique exposure to both lithium brine in South America and spodumene production in Australia.
Allkem shares could go to $19 in a year
Bell Potter currently has a buy rating and a $19 price target on Allkem stock.
The broker says:
In our view, the AKE-Livent Corporation merger will likely proceed and the merged entity will have an asset portfolio to support ongoing production and earnings growth into what we expect to be an exceptionally strong market for lithium.
We expect the forthcoming Scheme Booklet to provide further clarity on the company's growth outlook when it is released in the coming months.
Bearish on lithium but bullish on Allkem
Goldman Sachs is bearish on lithium prices but rates Allkem a buy with a $17.20 price target.
It comments:
With optionality across the Americas and Australia on the largest lithium resource in our coverage growing equity LCE production ~4x by FY28E, and at a discount to peers at ~1.0x NAV (peer average ~1.3x) and pricing ~US$990/t LT spodumene (peers ~US$1,200/t), Allkem remains our preferred lithium exposure. We maintain a Buy rating; 12m PT of A$17.2/sh.
What's the latest news from Allkem?
The lithium miner released an update on its proposed merger with Livent Corp yesterday.
Allkem said regulatory approval processes were progressing, and the companies were targeting completion by Christmas.
On Monday, the miner released updated technical studies for its Olaroz, Sal de Vida, Cauchari, James Bay and Mt Cattlin operations.
As my Fool colleague James reported, the studies confirmed the robust economics and tier-one nature of Allkem's assets, and management says this further de-risks the miner's growth and future production.
The studies calculated total group resources of about 40 million tonnes of lithium carbonate equivalent.
