UPDATE: BofA Securities Starts MP Materials (MP) at Neutral Despite Large Rare Earth Opportunity and First Mover Advantage

(Updated - April 1, 2021 7:38 AM EDT)

BofA Securities analyst Timna Tanners initiates coverage on MP Materials (NYSE: MP) with a Neutral rating and a price target of $38.00 reflecting: 1) attractive exposure to rare earths, 2) potential growth downstream to magnet making; and 3) shares look appropriately valued.

The analyst stated "Positives include access to a compelling rare earth deposit, with sunk processing costs behind and potential first-mover advantage. Magnet making would allow full vertical integration and be the holy grail, although some benefit seems priced in." "China dominates rare earths, with the majority of supply, processing, and magnet production. A recent decision to raise its quota 20% y/y in 2021 could draw excess supply, yet to date prices rose after the news. Even if MP has low-cost output, any irrational or subsidized supply would hurt its financial outlook. On top of supply-side risk, substitution can’t be ruled out. The entire operation rests on one asset, and execution of its processing project (Stage II) and magnet making uncertainty are also risks."

For an analyst ratings summary and ratings history on MP Materials click here. For more ratings news on MP Materials click here.

Shares of MP Materials closed at $36.90 yesterday.

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