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MP Materials Soars on Rare Earth Demand
19 Nov
Summary
- MP Materials has surged 275% year-to-date.
- Goldman Sachs initiated coverage with a buy rating.
- US government partners with MP Materials on rare earth supply.
MP Materials has experienced an extraordinary year, with its stock price skyrocketing by 275% year-to-date, signaling strong investor confidence. Goldman Sachs has recognized this potential, initiating coverage with a buy rating and a 12-month price target of $77, indicating an anticipated 32% increase from recent trading levels.
The company holds a strategic advantage as the largest rare earth producer in the Western Hemisphere, specializing in neodymium-praseodymium oxide, a crucial component for magnets used in electronics. This unique market position is further strengthened by its downstream expansion into refining and magnet production.
A significant development is the U.S. government's partnership with MP Materials, aimed at accelerating domestic rare earth capabilities. The Department of Defense has committed to a 10-year price floor for MP's oxide, mitigating commodity price risks and allowing for unlimited upside potential on sales above the floor.
