The Allkem Ltd (ASX: AKE) share price has been having a tough time of late.
Since this time last month, the lithium miner's shares have lost 15% of their value.
This has been driven by material weakness in lithium prices, which has spooked the market.
Is the Allkem share price weakness a buying opportunity?
While the pullback in the Allkem share price has been disappointing for shareholders, it could be a buying opportunity for investors looking for options in the lithium space.
That's because a large number of brokers are predicting big returns from its shares over the next 12 months.
For example, Bell Potter currently has a buy rating and an $18.10 price target on its shares, which implies over 60% upside.
Elsewhere, Goldman Sachs is bullish and has a buy rating and $16.80 price target, and Macquarie has an outperform rating and $17.50 price target.
Goldman's view
Of all these brokers, Goldman Sachs' view is arguably the most interesting.
That's because it has been very vocal about where it thinks lithium prices are heading (down) in the coming years.
Despite this bearish view on the price of the battery-making ingredient, its analysts say that Allkem "is our preferred lithium exposure" and see significant upside in its share price.
This is due to the company's production growth plans, which it believes will keep its earnings strong if prices fall. And if they don't, that's an added bonus! Goldman explains:
Allkem has one of the best production outlooks in our lithium coverage, with broad-based growth optionality. This drives our forecast for the company's equity LCE production growth of ~4x over five years to FY28E, supporting earnings rebounding to near current record levels despite the declining lithium price environment. AKE expect growth projects to be fully funded from existing corporate cash, existing or new corporate debt/project finance facilities and cash flow from operations.
