Molycorp (MCP) Looks Like Death On a Stick After Analyst Gets More Bearish on Rare Earth Prices
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Price: $0.36 --0%
Rating Summary:
2 Buy, 6 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
2 Buy, 6 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Molycorp (NYSE: MCP) is getting lambasted in early action Wednesday after a recent bull on the stock got more bearish. Shares are trading at new 52-week low levels.
JPMorgan's Michael Gambardella, who flipped his 'Buy' rating into a 'Neutral' rating in late September, now sees a lot less upside in the stock.
Gambardella lowered estimates and cut his price target from $57 to $39. The lowered number reflects the belief that the new Chinese export quotas for 2012, coupled with ramping production from Molycorp and Lynas, will put additional downward pressure on rare earth prices.
He also believes China's announcement of a full-year quota, instead of its previous practice of issuing quotas in half-year installment, takes away potential catalyst for
MCP as China will not be able to lower the quotas in the second half of the year.
JPMorgan is lowering their rare earth price basket price for MCP to $58/kg in 4Q12, $46/kg for 2013, and $38/kg starting in 2014. Previously, the firm's basket price for 4Q12 was $84/kg, $65/kg in 2013, $55/kg in 2014, and $48/kg as our long-term price starting in 2015.
The firm cut 2012E EPS to $2.78 from $4.50, 2013E to $4.56 from $7.84, and 2014E to $4.95 from $9.04.
Shares of Molycorp is down 9 percent this morning to $25.50.
JPMorgan's Michael Gambardella, who flipped his 'Buy' rating into a 'Neutral' rating in late September, now sees a lot less upside in the stock.
Gambardella lowered estimates and cut his price target from $57 to $39. The lowered number reflects the belief that the new Chinese export quotas for 2012, coupled with ramping production from Molycorp and Lynas, will put additional downward pressure on rare earth prices.
He also believes China's announcement of a full-year quota, instead of its previous practice of issuing quotas in half-year installment, takes away potential catalyst for
MCP as China will not be able to lower the quotas in the second half of the year.
JPMorgan is lowering their rare earth price basket price for MCP to $58/kg in 4Q12, $46/kg for 2013, and $38/kg starting in 2014. Previously, the firm's basket price for 4Q12 was $84/kg, $65/kg in 2013, $55/kg in 2014, and $48/kg as our long-term price starting in 2015.
The firm cut 2012E EPS to $2.78 from $4.50, 2013E to $4.56 from $7.84, and 2014E to $4.95 from $9.04.
Shares of Molycorp is down 9 percent this morning to $25.50.
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