Goldman Sachs sees no end in sight for MP Materials ' massive year-to-date rise. The bank initiated coverage of the rare earth mine operator with a buy rating and 12-month price target of $77 per share, implying an upside of 32% from Tuesday's close. Shares of MP Materials have surged 275% this year. Analyst Brian Lee pointed to MP's unique position as the largest rare earth producer in the Western Hemisphere, with a particular specialty in producing neodymium-praseodymium oxide, a raw material used to make magnets for electronics. MP YTD mountain MP YTD chart "We believe MP's downstream expansion into refining and magnet production, accelerated by a partnership with the U.S. government, will strategically position MP as a key supply chain component for rare earth refining and magnet production, of which China-based producers/refiners control 90-95% (per EIA, as of 2024)," he wrote. "As a result, we expect significant revenue and EBITDA growth, while vertical integration unlocks margin upside." Lee applauded MP's partnership with the U.S. government to accelerate domestic rare earths development. In the agreement, the Department of Defense will, for the next 10 years, guarantee a price floor of $110 per kilogram for MP's neodymium-praseodymium oxide. "DoW partnership provides MP with price floor, derisking commodity related earnings volatility," he wrote. "The agreement also allows sharing of upside with prices above the floor, resulting in guaranteed minimum prices with unlimited upside potential, per the company." The analyst also noted that MP's vertical integration efforts through its mine-to-magnet strategy is expected to "unlock significant value." Meanwhile, another "value creating flywheel" could come from MP's buildout of a recycling facility to support magnet production for Apple.
