Dahlman Rose Reiterates a 'Buy' on Molycorp (MCP); Secures Off-Take Agreements
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Price: $0.36 --0%
Rating Summary:
2 Buy, 6 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 16 | Down: 11 | New: 13
Rating Summary:
2 Buy, 6 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 16 | Down: 11 | New: 13
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Dahlman Rose reiterates a 'Buy' on Molycorp (NYSE: MCP) price target of $70.00.
Dahlman analyst says, "Molycorp announced that it has secured agreements for 78% of its Phase 1 rare earth production. The company had previously indicated that it wanted to convert 75% of its production into firm contracts by year-end 2011; thus, it appears that management has slightly exceeded its expectation...MCP's agreements mean less rare earth material to hit the spot market. Historically, the overwhelming majority of rare earth sales were transacted on the spot market. With Molycorp entering into off-take agreements with its customers, Molycorp will only need to place approximately 4,200 tons of its initial production on the spot market."
"While we anticipate some continued near-term pricing weakness, we believe that long-term fundamentals remain promising. We believe that the structure that was enacted by Chinese regulators will likely place some further downward pressure on rare earth prices, over the near term. But over the long term, we believe that the ability of Molycorp and Lynas to enter into contracts with customers should be supportive of rare earth prices. Further, given Molycorp's low cost structure, we believe that the company is well positioned to enjoy substantial margins when its Mountain Pass facility commences production, and we reiterate our rating on the stock."
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 $23.98 yesterday.
Dahlman analyst says, "Molycorp announced that it has secured agreements for 78% of its Phase 1 rare earth production. The company had previously indicated that it wanted to convert 75% of its production into firm contracts by year-end 2011; thus, it appears that management has slightly exceeded its expectation...MCP's agreements mean less rare earth material to hit the spot market. Historically, the overwhelming majority of rare earth sales were transacted on the spot market. With Molycorp entering into off-take agreements with its customers, Molycorp will only need to place approximately 4,200 tons of its initial production on the spot market."
"While we anticipate some continued near-term pricing weakness, we believe that long-term fundamentals remain promising. We believe that the structure that was enacted by Chinese regulators will likely place some further downward pressure on rare earth prices, over the near term. But over the long term, we believe that the ability of Molycorp and Lynas to enter into contracts with customers should be supportive of rare earth prices. Further, given Molycorp's low cost structure, we believe that the company is well positioned to enjoy substantial margins when its Mountain Pass facility commences production, and we reiterate our rating on the stock."
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 $23.98 yesterday.
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