Molycorp (MCP) Clears SEC Hurdle, Others Remain

June 28, 2013 10:44 AM EDT
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Shares of Molycorp (NYSE: MCP) traded higher on Friday after it announced the SEC concluded its investigation of the company with no formal action taken. Commenting, Goldman Sachs analyst Brian Lee said he is not surprised to see shares climb, but he is reluctant to become positive on the name given other significant headwinds.

"Given a lack of disclosure and clarity surrounding the SEC investigation, we had viewed it as a key risk factor for the stock. Thus, we expect shares will trade higher in the near-term given the removal of this overhang," said Lee. "However, while we view the favorable outcome of the investigation as a near-term positive, we continue to see fundamentals as relatively challenging, with near-term execution risk still significant as Molycorp ramps toward full-scale Phase I production at its Mountain Pass facility. Additionally, rare earth oxide
prices have begun to experience declines in recent months after stabilizing
somewhat at the beginning of 2013."

The report noted price pressure for light rare earth, with cerium oxide down 39% year-to-date and lanthanum oxide down 33%.

Goldman Sachs has a Neutral rating on Molycorp with a price target of $6.00

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 $5.61 yesterday.

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