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Investing.com - Canaccord Genuity raised its price target on MP Materials (NYSE:MP) to $55.00 from $27.00 on Friday, while maintaining a Buy rating on the rare earth materials producer. The stock, currently trading at $45.23 with a market capitalization of $7.39 billion, has surged 42% in the past week and is trading near its 52-week high of $48.12. According to InvestingPro analysis, the stock appears overvalued at current levels.
The significant price target increase reflects Canaccord’s updated discounted cash flow model, which now extends to 2040 and assumes a weighted average cost of capital (WACC) of approximately 12% with a terminal growth rate of about 6%.
Canaccord’s revised model incorporates projections for 10,000 metric tons of NdFeB magnet production and NdPr materials revenue with a new price floor of $110 per kilogram.
The firm also factored in assumptions for additional manufacturing capacity in its updated valuation model for the rare earth materials company.
MP Materials mines and processes rare earth materials that are critical components in magnets used in electric vehicles, wind turbines, and other clean energy and high-tech applications.
In other recent news, MP Materials has announced a significant public-private partnership with the U.S. Department of Defense, aimed at expanding its rare earth capabilities. This deal includes a $400 million equity investment from the Defense Department and a $150 million loan to support expansion at the Mountain Pass facility. Additionally, MP Materials has secured $1 billion in commitment letters from JPMorgan and Goldman Sachs for its second domestic magnet manufacturing facility. In another development, Jefferies has downgraded MP Materials from Buy to Hold, citing China’s shift to short-term export licenses for rare earth magnets, which reduces the risk of near-term shortages. Meanwhile, reports indicate that the Trump administration is considering using the Defense Production Act to prioritize and fund rare earth projects critical to national security. MP Materials, as the sole domestic producer of rare earths, could benefit from this potential government support. Furthermore, MP Materials held its Annual Meeting of Stockholders, resulting in the election of three Class II directors and the ratification of KPMG LLP as the independent auditor for the fiscal year ending December 31, 2025. These recent developments highlight MP Materials’ strategic positioning in the rare earths market.
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