Molycorp (MCP) Demand Improves but Co. Not Out of Woods on Pricing

May 10, 2013 9:26 AM EDT Send to a Friend
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Goldman Sachs today maintained a Neutral rating on Molycorp (NYSE: MCP) with a price target of $6.00. Molycorp reported Q1 results yesterday. Commenting, analyst Brian Lee noted that rare earth demand was normalizing, but pricing and execution were still a challenge.

"Molycorp's outlook for REO pricing appears to be less than constructive, as according to management illegal Chinese production and smuggling remains prevalent despite a concerted crackdown by Beijing. This increases the importance of being a low cost producer, which for Molycorp requires the integration of its chlor-alkali plant, a facility not expected to come online until late-2013," said Lee.

"We see near-term catalysts to potentially become more constructive revolving around: (1) improvement in production cost visibility, (2) further balance sheet support in the form of an expected $125mn revolver, and/or (3) positive trial results for Sorbx," added the analyst.

For an analyst ratings summary and ratings history on Molycorp (NYSE: MCP) click here. For more ratings news on Molycorp click here.

Shares of Molycorp closed at $5.59 yesterday.


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