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Investing.com -- Morgan Stanley reiterated its Equal-weight rating on MP Materials, maintaining a $68.50 price target and noting that while the company’s long-term potential remains intact, project execution risks and rare earth price volatility warrant a balanced stance.
The bank updated its forecasts following the miner’s third-quarter results, now expecting EBITDA of “$50 million in 4Q25 (+28% vs. previous forecast), $22 million in 2025 (+259%), $266 million in 2026 (-12%), $416 million in 2027 (in-line) and $517 million in 2028 (+5%).”
Normalized EPS estimates were also revised to “$0.12 in 4Q25, -$0.18 in 2025, $0.58 in 2026, $1.06 in 2027, and $1.24 in 2028.”
Morgan Stanley analyst Carlos De Alba described MP Materials as “developing a fully domestic rare earth mine-to-magnet supply chain,” adding that its partnership with the U.S. Department of Defense “has materially de-risked the company’s business model.”
The analyst noted that MP plans to begin commercial production of permanent magnets, used in “critical military platforms and green energy applications like EVs, wind turbines and humanoids/robotics,” by the end of 2025.
Still, De Alba cautioned that “project execution is the biggest risk now,” even as MP “has been delivering on its operating targets and has a strong balance sheet to support the downstream transition.”
Looking longer term, Morgan Stanley sees potential upside if the company successfully expands into recycling, which “has the potential to significantly boost MP’s ability to expand its magnetics business.”
The firm’s valuation reflects a “sum-of-parts DCF” using a reduced weighted average cost of capital to account for government support, with its $68.50 target set as “the mid-point of our high-base and low-base cases.”