Goldman Sachs Takeways from Molycorp's (MCP) Analyst Day; PT Lowered to $4

Goldman Sachs maintained a Neutral rating on Molycorp (NYSE: MCP) and lowered its price target of $4.00 (from $4.50). 2016 EPS estimates were lowered to $0.23 from $0.29. Comments follow the company's analyst day on Wednesday.

Analyst Brian Lee said, "Making progress, but bottlenecks persist. Molycorp indicated that it has made significant progress in reducing mechanical bottlenecks at Mountain Pass since 2013. However, two significant de-bottlenecking projects remain, particularly in leeching/cracking, with equipment still needing to be installed and commissioned in certain cases. We note these issues are focused on increasing throughput vs. chemistry-related, and the targeted timing of 2H14 resolution does not appear to be devoid of risk, in our view.

"Financing needs looming. We expect Molycorp will need to raise capital, with management indicating talks are most advanced on equipment saleleasebacks – primarily with a focus on water treatment and CHP power plant assets. We currently model $100-150mn in new debt by YE2014." he continued. "Contracted visibility remains modest, with potential to grow. Molycorp noted 90%-95% of La capacity is contracted via US-based FCC customers (at Phase I rates) while NdPr is roughly 1/3 contracted (with customers outside of China). Visibility on Ce is low; however, the company cited potential for better volume visibility in magnets via autos customers."

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 $2.91 yesterday.

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