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Investing.com - Canaccord Genuity downgraded Lynas (F:LYI) Rare Earths Ltd (ASX:LYC) (OTC:LYSDY) from Buy to Hold while raising its price target to AUD9.65 from AUD8.80.
The downgrade comes despite Lynas reporting record quarterly NdPr (neodymium-praseodymium) production of 2.1 kilotonnes, exceeding Canaccord’s estimate of 1.6 kilotonnes and consensus forecasts of 1.8 kilotonnes. Total (EPA:TTEF) rare earth oxide (TREO) production reached 3.2 kilotonnes, also beating expectations.
Rare earth oxide sales volumes aligned with forecasts, while average pricing improved to A$60.20 per kilogram, approximately 13% higher than Canaccord’s estimates and 20% above the previous quarter. The company attributed the pricing improvement partly to new customer contracts independent of Chinese indices.
Lynas reported closing cash of A$166 million, falling below Canaccord’s forecast of A$231 million and consensus expectations of A$269 million. The lower cash position resulted from higher cash costs, working capital movements, and increased capital expenditure and tax payments.
The company’s higher costs were attributed to spillover from lower costs in the March quarter and Kalgoorlie costs no longer being capitalized, according to Canaccord’s analysis.
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