The rare earth trade roared back to life Monday, with USA Rare Earth Inc. (NASDAQ:USAR) and MP Materials Corp. (NYSE:MP) climbing as a transformative M&A deal collided with bullish new Wall Street coverage of the sector. 

USA Rare Earth’s $2.8 Billion Brazil Bet

USA Rare Earth kicked off the week by announcing a $2.8 billion cash-and-stock acquisition of Brazilian miner Serra Verde Group, owner of the Pela Ema mine — the only scaled producer outside Asia of all four magnetic rare earths: neodymium, praseodymium, dysprosium and terbium.  

The deal calls for $300 million in cash plus 126.85 million newly issued USAR shares.

CEO Barbara Humpton hit CNBC’s “Squawk Box” Monday morning to pitch the deal as a step-change in breaking China’s chokehold on the rare earth supply chain. 

“The world has become too dependent on a single source and it’s high time to break that dependency,” Humpton said, calling Pela Ema a “one-of-a-kind asset," per CNBC. 

Crucially, Serra Verde already carries a 15-year, 100% offtake agreement with a U.S. government-backed special purpose vehicle that includes guaranteed price floors on all four magnetic elements. 

Management is guiding to $550 million to $650 million of run-rate EBITDA from Serra Verde by year-end 2027, scaling to roughly $1.8 billion in combined EBITDA by 2030.

Wedbush Joins The Party

Adding fuel, Wedbush analyst Sam Brandeis initiated coverage on both USAR and MP Materials with Outperform ratings Monday — a bullish double-tap that helped extend the sector rally. 

Brandeis slapped a $29 price target on USAR (before the Serra Verde news) — implying roughly 45% upside from Friday’s $19.95 close — citing the company’s heavy rare earth mine-to-magnet platform anchored by the largest HREE deposit, according to MarketWatch. 

For MP Materials, Wedbush set a $90 target, branding the company “America’s designated rare earth national champion,” according to Investing. 

The firm highlighted MP’s vertical integration across the Mountain Pass mine and its Independence magnet facility in Fort Worth as the most underappreciated dimension of the bull case, with Mountain Pass standing as the lowest-cost producer of rare earth concentrate outside China.

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