Goldman Sachs Comments on Molycorp (MCP) Q3 Results

November 8, 2013 9:50 AM EST Send to a Friend
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Goldman Sachs maintained a Neutral rating on Molycorp (NYSE: MCP) with a price target of $5.00. Analyst Brian Lee commented on Q3 results, calling demand recovery a positive, though it was offset by weak pricing.

"We note a clearly improved tone and steady fundamental progress this quarter, including: (1) demand recovery for Molycorp's highest value product, magnetic rare earths (+20% qoq); (2) tangible cost reductions at Mountain Pass (-25% qoq) after several quarters of no progress; and (3) commissioning of its chlor-alkali facility which remains on schedule for 4Q13," said Lee.

"We believe these positives were somewhat offset, however, by Molycorp's muted expectations for SorbX commercialization and diminished outlook for cerium sales in 2014 which, if not reconciled over the longer term, could negatively impact its ability to hit sub-$10/kg production costs and/or ramp to Phase II capacity, in our
view. Thus, we continue to see balanced risk/reward in the interim as REO demand recovery is offset by soft pricing and still sizable execution risk," he said.

For an analyst ratings summary and ratings history on Molycorp click here. For more ratings news on Molycorp click here.

Shares of Molycorp closed at $4.76 yesterday.


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