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Investing.com - Canaccord Genuity raised its price target on USA Rare Earth Inc (NASDAQ:USAR) to $22.00 from $21.00 on Tuesday, while maintaining a Buy rating on the stock. The company, currently trading at $17.54 with a market capitalization of $1.71 billion, has seen its stock surge nearly 195% over the past six months.
The price target increase follows the company’s transaction involving LCM, which comes with a $217 million price tag. Canaccord noted that while the deal appears to be dilutive in the near term due to limited financial disclosure, it views the transaction as "highly strategic." The company maintains a strong liquidity position with a current ratio of 15.11 and holds more cash than debt on its balance sheet.
The research firm highlighted the potential for the LCM acquisition to help improve USA Rare Earth’s gross margins over the long term, which factored into its decision to raise the price target. According to InvestingPro analysis, the company currently suffers from weak gross profit margins, with 11 additional key insights available to subscribers.
Canaccord’s updated valuation is based on a discounted cash flow (DCF) model that assumes approximately 14% weighted average cost of capital (WACC) and roughly 6% terminal growth.
The firm cited "healthy growth potential beyond 2035" as part of its rationale for the terminal growth assumption in its valuation model for USA Rare Earth.
In other recent news, USA Rare Earth Inc announced a definitive agreement to acquire LCM, a UK-based rare earth metal and alloy producer, for $100 million in cash and 6.74 million shares of USAR common stock. This acquisition marks a significant step in establishing a comprehensive rare earth supply chain. In leadership developments, Barbara Humpton has been appointed as the new CEO of USA Rare Earth, effective October 1, 2025. Humpton, with a strong background from her previous role at Siemens USA, will succeed Josh Ballard.
In analyst updates, Canaccord Genuity raised its price target for USA Rare Earth to $21 from $17, citing changes in its financial model, including increased magnet price assumptions. Benchmark maintained its Buy rating and a $15 price target on the stock, highlighting strong customer interest and better-than-expected magnet sales forecasts for 2026. Cantor Fitzgerald also increased its price target to $20 from $16, following impressive second-quarter 2025 results. These recent developments reflect a positive outlook for USA Rare Earth among analysts.
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