Allkem: Growth upside outweighs the risks

About the author:

Author name:

By Max Vickerson

Job title:

Analyst

Date posted:

26 September 2023, 7:00 AM

Sectors Covered:

Industrials, New Energy

• Allkem (ASX:AKE) announced a range of cost increases across its portfolio of growth projects, whilst the company has also increased its long term commodity price assumptions, boosting its estimated project values.
• We had largely factored in higher costs compared to the company’s older studies, albeit increasing our forecasts for some projects. Offsetting this we now include Cauchari in our valuation which lifts our price target to (login to view) after factoring in higher costs in James Bay and Sal de Vida.
• The higher price target and recent share price weakness means we see significant upside and upgrade our rating to ADD but we note the higher risk for AKE with a valuation dependent upon successfully delivering significant growth.

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