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Investing.com - Jefferies has downgraded MP Materials (NYSE:MP), a $5.2 billion market cap rare earth materials company, from Buy to Hold while raising its price target slightly to $33.00 from $32.00. The stock has shown strong momentum with a 126% return over the past year, according to InvestingPro data.
The downgrade comes as China has shifted to short-term export licenses for rare earth magnets, which Jefferies analyst Laurence Alexander notes reduces the risk of near-term shortages in the market.
Global policy responses are likely to focus on stimulating supply, according to Jefferies, while demand outlook remains mixed across key markets including electronics, windmills, electric vehicles, and robots.
The firm views MP Materials’ risk/reward profile as "neutral, at best," even when considering what it calls "generous assumptions" including a fly-up scenario, rapid expansion, elevated returns on invested capital over the longer term, and a lower equity risk premium.
MP Materials operates the Mountain Pass rare earth mining and processing facility in California, which is the only integrated rare earth mining and processing site in North America.
In other recent news, MP Materials Corp. has been highlighted due to significant developments. The company reported record production of neodymium-praseodymium oxide in the first quarter of 2025, marking a milestone as Stage III operations now contribute positively to EBITDA. Analysts from DA Davidson maintained a Buy rating for MP Materials with a $32 price target, citing the company’s strategic move to halt shipments of Stage I concentrate to China. Additionally, Morgan Stanley (NYSE:MS) upgraded the stock rating from Equalweight to Overweight, raising the price target to $34, acknowledging the company’s strong position in the rare earths sector.
The Trump administration is reportedly considering using the Defense Production Act to fund rare earth projects, which could benefit MP Materials as the sole domestic producer in the U.S. Deputy Defense Secretary Steve Feinberg is reportedly working to secure funding for the company. At the recent Annual Meeting of Stockholders, MP Materials elected three Class II directors and ratified KPMG LLP as its independent auditor for 2025. These developments come as the company aims to strengthen its supply chain and reduce reliance on Chinese exports for rare earth elements.
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