The Allkem Ltd (ASX: AKE) share price has started the week in a positive fashion.
In afternoon trade, the lithium miner's shares are up 2% to $14.97.
This means the Allkem share price is now up 34% since the start of the year.
Can the Allkem share price keep rising?
The good news for investors is that one leading broker believes the Allkem share price can keep rising.
According to a note out of Bell Potter, its analysts have retained their buy rating with a slightly trimmed price target of $19.45.
This implies potential upside of 30% for investors over the next 12 months from current levels.
Why is the broker bullish?
Bell Potter was relatively pleased with Allkem's performance during the first quarter. And while it notes that the Olaroz Stage Two expansion is behind schedule, it has only resulted in a modest decrease to its earnings estimates.
Commenting on the quarterly performance, the broker said:
September 2022 quarter lithium carbonate production of 3.3kt (BP est. 3.3kt) and sales of 3.7kt (BP est. 3.3kt). Unit costs were US$4,563/t (BP est. US$4,782/t) and realised prices US$40,317/t (BP est. $46,900/t). AKE now expect first production from the Stage 2 expansion in Q2 2023 (previously Q4 2022) and that total capex will be US$425m (up 12%). AKE held 1H FY23 price guidance of $47,000/t for Olaroz lithium carbonate.
Overall, Bell Potter remains very positive on the company's outlook and believes it is well-placed to generate significant free cash flow thanks to a combination of strong prices and production growth.
We expect AKE's cash generation to lift substantially into 2023 with ongoing strength in lithium demand, commodity prices and production growth. AKE is aiming to maintain 10% share of supply in a global lithium market experiencing unprecedented growth; it has a portfolio of growth projects, balance sheet strength and cash flow from existing projects to achieve this target. AKE's portfolio is also diversified across lithium commodity type, mode of production, asset location and end-user country.
