Allkem share price sinks a further 5%: Is this a buying opportunity?

It has been a tough three months for this lithium miner's shares.

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The Allkem Ltd (ASX: AKE) share price is having another poor session.

In afternoon trade, the lithium miner's shares are down 5% to $10.56.

This latest decline means that its shares are down approximately 36% over the last three months.

Why is the Allkem share price falling today?

Investors have been selling Allkem and other ASX lithium shares today following another poor night of trade for their peers on Wall Street.

Albemarle Corporation (NYSE: ALB), Livent Corp (NYSE: LTHM), and Sociedad Quimica y Minr de Chile SA (NYSE: SQM) all fell ~5% or more and hit 52-week lows during the session.

This has been driven partly by a bearish broker note out of Bank of America, which warned that the lithium market would be oversupplied in 2024 and 2025.

The market appears to believe that this will mean that lithium prices continue to fall and then remain at low levels for the coming years.

Though, regular readers shouldn't find this surprising. I've been warning that lithium prices could crash since the start of the year.

At that point, the lithium spodumene 6% spot price was US$5,990 per tonne and the lithium carbonate spot price was US$66,750 per tonne. At the end of last week, spot prices were US$2,230 and US$20,652 per tonne, respectively.

Is this a buying opportunity?

Goldman Sachs continues to believe that the Allkem share price is great value even though it expects lithium prices to keep falling.

Its analysts have a buy rating and a $15.20 price target, which implies a potential upside of approximately 44% for investors. The broker said:

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.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in Allkem. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bank of America and Goldman Sachs Group. 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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