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Investing.com - JPMorgan upgraded Lynas (F:LYI) Rare Earths Ltd (ASX:LYC) (OTC:LYSDY) from Underweight to Neutral on Friday, while more than doubling its price target to AUD10.00 from AUD4.90.
The upgrade follows Lynas’s recent quarterly results, which showed NdPr oxide production of 2.1kt, exceeding JPMorgan’s forecast by 22%, though REO sales of 2.83kt fell 12% below expectations. The company’s average basket selling price of $60/kg outperformed forecasts by 22%, offsetting higher production costs and capital expenditures.
JPMorgan noted Lynas’s announcement of a non-binding memorandum of understanding with JS Link to supply rare earths for magnet manufacturing in Malaysia, which aligns with the company’s recent MOU on upstream Malaysian capacity and improves Lynas’s volume outlook.
The firm’s valuation update reflects a scenario of a $110/kg long-term price for NdPr oxide, following the U.S. Department of Defense agreement to underwrite this price point for MP Materials.
This significant price assumption adjustment drove JPMorgan’s substantial upward revision in its valuation of Lynas Rare Earths to $10 per share, supporting the rating upgrade to Neutral.
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