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Investing.com - TD Cowen has more than doubled its price target on MP Materials (NYSE:MP) to $55.00 from $25.00 while maintaining a Buy rating on the rare earth materials producer. The company, now valued at $7.54 billion, has seen its stock surge 42% in the past week alone, according to InvestingPro data.
The significant price target increase follows MP Materials’ announcement of a public-private partnership with the Department of Defense (DoD), which is set to become the company’s largest shareholder with a convertible stake of 15%.
The partnership includes a $110 per kilogram price floor for neodymium-praseodymium (NdPr) products, which TD Cowen notes will incentivize MP Materials to accelerate its Stage II separation capabilities.
The agreement also supports MP Materials’ plans to expand its magnet production capacity by tenfold, according to the research firm’s analysis.
MP Materials stock has already responded with a 51% increase following the partnership announcement, though TD Cowen indicates the deal represents a material rerating of the company and creates potential for increased cash flow upside.
In other recent news, MP Materials has announced a transformative multibillion-dollar partnership with the U.S. Department of Defense to expand its rare earth capabilities and build a new magnet manufacturing facility. This agreement includes a $400 million equity investment from the Defense Department and a $150 million loan to support the expansion of MP Materials’ Mountain Pass facility. Additionally, the company has secured $1 billion in commitment letters from JPMorgan and Goldman Sachs to fund its second domestic magnet manufacturing facility, known as the 10X Facility. Under this 10-year agreement, the Department of Defense will establish a price floor for MP’s NdPr product and back 100% of magnet sales from the 10X Facility.
In related developments, Canaccord Genuity has raised its price target for MP Materials to $55.00, reflecting updated projections for NdFeB magnet production and NdPr materials revenue. Meanwhile, Jefferies downgraded MP Materials from Buy to Hold, citing changes in China’s export policy for rare earth magnets as a factor. Furthermore, Bloomberg reports that the Trump administration is considering using the Defense Production Act to fund rare earth projects, potentially benefiting MP Materials as the only domestic producer of rare earths in the United States. DA Davidson continues to support MP Materials with a Buy rating, highlighting the significance of the company’s partnership with the Department of Defense in strengthening its position in the industry.
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