92% upside: The ASX lithium stock multiple experts are keen on right now

These shares are down 47% in just 4 months, but that simply makes them a bargain buy.

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It's not often a stock halves in price over just four months, but experts are tipping it for a revival.

But that's exactly what's happening with one particular lithium stock at the moment.

Both Morgans investment advisor Jabin Hallihan and Novus Capital stock broker John Edwards are bullish on Allkem Ltd (ASX: AKE), which has dropped an ugly 47% since 13 July.

Let's check out their thinking:

A lot going on: falling lithium price, merger

The big cloud hanging over Allken's head is that it's currently in negotiations for a takeover by US giant Livent Corp (NYSE: LTHM).

Edwards believes this is weighing down the stock.

"This lithium producer operates in Australia, Argentina and Canada," Edwards told The Bull.

"Long term growth plans remain uncertain due to its proposed friendly merger with US brine producer Livent Corporation, which, in our view, is restraining the share price."

Plummeting global lithium prices have not helped either. According to TradingEconomics, lithium carbonate was going for almost 600,000 CNY per tonne a year ago, but now trades at just 151,500 CNY.


But Edwards has a speculative price target of $17 for Allkem shares, which is about a 92% premium on current levels.

"Production growth is forecast to quadruple during the next five years. Allkem had a strong cash balance at its last quarterly update."

Hallihan warns there are short-term risks to the lithium prices, but his team retains an add rating for Allkem.

"Allkem is a specialty lithium chemicals company… We believe the company offers long term value despite challenges within the sector."

The Morgans team has a $14.10 price target for the lithium stock.

Allkem apparently has many other professional fans. According to CMC Markets, 13 out of 18 analysts currently rate it as a buy.

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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