Allkem Ltd (ASX: AKE) shares could have plenty of upside from current levels.
That's the view of analysts at Bell Potter, who are tipping the lithium miner as a top buy.
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Allkem shares tipped to rise
According to a note from this morning, the broker was impressed with the company's stronger-than-expected performance in FY 2023. It commented:
AKE reported FY23 underlying EBITDA of US$910m (BP est. US$843m) and NPAT of US$521m (BP est. US$501m). No dividend was declared, as expected.
In light of this, Bell Potter has retained its buy rating with an improved price target of $19.
Based on the current Allkem share price of $14.13, this implies a potential upside of over 34% for investors over the next 12 months.
What else did the broker say?
While Bell Potter was a touch disappointed with the company's project development, it sees plenty of news flow on the horizon which could boost Allkem's shares. It said:
Key project development timelines remain uncertain, with James Bay permitting delays and the Sal de Vida schedule still being evaluated. However, we do expect material news flow over the coming months as studies progress to support the forthcoming Scheme Booklet and Independent Experts Report. An AKE shareholder vote on the merger with Livent is expected later in 2023.
In addition, the broker remains positive on the proposed merger with Livent Corp (NYSE: LTHM). It adds:
In our view, the AKE-Livent Corporation merger will likely proceed and the merged entity will have an asset portfolio to support ongoing production and earnings growth into what we expect to be an exceptionally strong market for lithium. We expect the forthcoming Scheme Booklet to provide further clarity on the company's growth outlook when it is released in the coming months.
