The Allkem Ltd (ASX: AKE) share price has surged ahead in May.
The lithium company's shares have gained 12% from their $12.18 market open on 2 May to Tuesday's closing price of $13.71. In today's trade, the company's share price fell 2.77%. For perspective, the S&P/ASX 200 Index (ASX: XJO) closed 1.03% lower today.
So why has Allkem had such a good month?
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Why has the Allkem share price gone up?
Allkem is a lithium and boron producer with projects in Argentina, Western Australia, Japan, and Canada.
The company's share price appears to have surged on the back of positive broker notes and optimism that lithium demand will outstrip supply.
As my Foolish colleague Zach reported on 25 May, Barrenjoey analysts rated Allkem as a buy with a $15 price target. This is 9% more than its current share price.
Brokers at Cowen showed even more optimism toward the Allkem share price, upgrading it to an $18 price target.
Meanwhile, earlier in May, Morgans placed an add rating on the company's share price with a $16.98 price target. As my Foolish colleague James noted, because Allkem is already shipping lithium in large quantities, it has the potential to benefit from high lithium prices.
In the company's quarterly activities report released in mid-April, Allkem said it aims to increase lithium production three-fold by 2026. The company is targeting maintaining a 10% share of the global lithium market across the next decade.
The company's Mt Caitlin operation, located in WA, produced 48,562 dry metric tonnes (dmt) of spodumene concentrate at 5.4% lithium oxide grade in the March quarter. A total of 66,011 tonnes were shipped in the quarter, generating record revenue of US$143.8 million from this project.
Allkem is also expanding the Olaroz lithium carbonate facility in Argentina with a stage two lithium facility. Construction was 77% complete by the end of March with production targeted in the second half of this year.
In Japan, the company has completed the construction of the Naraha lithium hydroxide plant. First production from this site is predicted in the third quarter of this year.
Share price snapshot
The Allkem share price has soared 108% in the past 12 months, while it is up nearly 32% year to date.
For perspective, the ASX 200 benchmark index has returned less than 1% in the past year.
Allkem has a market capitalisation of about $8.7 billion based on the current share price.
