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Molycorp (MCP) Fundamentals 'Nearing Bottom' But Not Time to Pull Trigger

August 9, 2013 10:25 AM EDT Send to a Friend
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Price: $1.92 +2.67%

Rating Summary:
    5 Buy, 6 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 1
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Goldman Sachs maintained a Neutral rating on Molycorp (NYSE: MCP) with a price target of $6.00. The stock declined on Friday in the wake of disappointing Q2 results. In the view of analyst Brian Lee, fundamentals are nearing a bottom, but ramp and cost reduction remain key concerns.

"We note several positive developments during the quarter, including: (1) normalizing REO demand as customer inventory destocking appears to have subsided and 2H13 order patterns are on the mend; (2) recent price stabilization in light REOs and increases in NdPr, in part due to progress by the Chinese government to curb illegal REO smuggling; and (3) Molycorp's conversion of its first wastewater customer for SorbX at pricing in line with expectations," said Lee.

"We see risk/reward as balanced pending clarity around Molycorp's anticipated closing on a $125mn revolver (expected in Sept) and commissioning of its chlor-alkali facility, which appears to be a key factor in achieving targeted sub-$10/kg production costs and profitability," he added.

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 $7.41 yesterday.




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