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STILLWATER, Okla. - USA Rare Earth, Inc. (NASDAQ:USAR), a $1.2 billion market cap company that has delivered a 25% return over the past year, has signed a memorandum of understanding with Moog Electric Motion Solutions to supply neodymium magnets for Moog’s CoreMotion liquid coolant distribution pumps used in data centers, according to a company press release. According to InvestingPro analysis, the company appears overvalued at current levels, despite its strong market position.
Under the agreement, USAR will design and test permanent neodymium magnets for use in Moog’s cooling technology. USAR plans to begin production of these magnets in early 2026 from its manufacturing facility currently under construction in Stillwater, Oklahoma.
The company will utilize its recently commissioned Innovations Lab, which began operations on March 31, to prototype and qualify the magnets for Moog’s specifications. The lab replicates the production capabilities of USAR’s planned commercial manufacturing facility.
"With the rapid growth of AI, demand for high-performance data center cooling solutions is accelerating and reliable access to powerful, heat-resistant rare earth magnets is essential," said Gwen Handy, Sector Supply Chain Manager at Moog, in the press release.
USAR is developing a vertically integrated domestic rare earth magnet production supply chain. The company is constructing a 310,000 square foot manufacturing facility in Stillwater and controls mining rights to the Round Top Mountain rare earth and critical minerals deposit in West Texas.
The agreement with Moog follows several similar arrangements USAR has established with potential customers since the opening of its Innovations Lab.
Neodymium magnets are used in various industries including defense, automotive, aviation, industrial, medical, and consumer electronics. While USAR currently trades at a high P/E ratio of 70, analysts have identified multiple growth catalysts for the company. Discover comprehensive analysis and 10+ additional key insights about USAR through InvestingPro’s detailed research reports, available for over 1,400 US stocks.
In other recent news, USA Rare Earth Inc. reported its Q1 2025 financial results, showing a net income of $51.8 million due to a non-cash warrant gain, despite an operating loss of $8.7 million. The company is actively investing in its domestic supply chain for rare earth magnets, with a significant 310,000-square-foot manufacturing facility under construction in Oklahoma. In addition to financial updates, USA Rare Earth announced the appointment of David Bushi as Senior Vice President of Manufacturing, bringing over 25 years of experience to oversee operations at their neodymium magnet production facility.
Analyst firms have shown confidence in USA Rare Earth’s growth potential, with Canaccord Genuity initiating coverage with a Buy rating and a $17 price target, and Roth/MKM also assigning a Buy rating with a $15 price target. These positive outlooks reflect the company’s efforts to establish a vertically integrated supply chain for rare earth elements within the United States. Furthermore, USA Rare Earth has entered into a strategic partnership with PolarStar Magnetics to advance domestic magnet supply, highlighting their commitment to securing a homegrown supply chain for critical industries.
The company continues to focus on its "mine-to-magnet" strategy, aiming to reduce reliance on international suppliers. CEO Joshua Ballard emphasized the importance of this initiative in light of geopolitical shifts and the strategic importance of rare earth elements in defense and technology sectors. USA Rare Earth’s developments are part of a broader effort by the United States to enhance its independence in critical sectors, with potential long-term benefits for its shareholders.
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