Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
Investing.com - BMO Capital reinstated coverage on MP Materials (NYSE:MP), currently trading at $70.59 with a market capitalization of $12.5 billion, with a Market Perform rating and a price target of $76.00 on Thursday.
The research firm cited MP Materials’ "transformational partnership" with the Department of Defense (DoD) as a key factor in its assessment, noting that the company has emerged as "the U.S.’ rare earth champion." The stock has demonstrated strong momentum, delivering an impressive 352% return year-to-date.
According to BMO Capital, the DoD partnership provides MP Materials with significant benefits including price floors, minimum EBITDA margins, guaranteed magnet offtake, and the capital needed to execute its growth plans.
The firm believes this partnership creates a clear pathway to stable and predictable earnings for the rare earth materials producer.
Despite these positive developments, BMO Capital assigned a Market Perform rating, explaining that "given the future earnings visibility, we believe the market is accurately valuing the shares."
In other recent news, MP Materials has seen multiple adjustments to its stock price targets by various analyst firms. Jefferies raised its price target for MP Materials to $90, citing the company’s vertical integration strategy and potential for international investments. Similarly, DA Davidson significantly increased its price target to $82 from $32, influenced by the company’s recent Department of Defense agreement that includes a floor price arrangement for NdPr products. CFRA also adjusted its outlook, raising its price target to $88, although it downgraded the stock from Strong Buy to Buy due to a revised EBITDA estimate.
Additionally, MP Materials has filed a prospectus supplement to register the potential resale of up to 24.5 million shares held by the United States Department of Defense. This filing does not indicate an immediate intention by the DoD to sell shares, nor will MP Materials receive any proceeds if the DoD decides to sell. In broader industry news, the Trump administration is considering redirecting $2 billion from the CHIPS Act to critical minerals projects, aiming to reduce U.S. reliance on China for essential minerals. These developments highlight ongoing strategic adjustments and government considerations in the critical minerals sector.
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