MP Materials Corp (NYSE:MP) has "early mover advantages" as one of the few experienced Western rare earth producers, according to Needham, which initiated coverage with a Buy rating and an $81 price target. Analyst Carter Goman said the sector is in the early stages of a multi-year investment cycle, driven by a growing split between Chinese and non-Chinese supply chains.
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The company is well positioned to be a key beneficiary of this investment cycle, as it is an early mover in the industry, Goman added.
MP Materials will have an advantage in the race to build capacity outside China. After all, it is the largest producer of rare earth materials in the Western Hemisphere. Goman expects it to emerge as a leader in this buildout.
Several companies plan to ramp up capacity to meet rising demand. MP Materials is the "most credible," given its established operations and its management team’s track record, Goman said.
"As we move toward the end of the decade and into the 2030s, the narrative should shift from supply back to demand, with accelerating EV adoption and humanoid robot deployments as key drivers," the analyst wrote.
The company's access to NdPr oxide is a key competitive advantage, Goman noted. NdPr oxide is a blend of two rare earth elements: Neodymium (Nd) and Praseodymium (Pr),
The U.S. alone is likely to require around 30,000 MT (metric tons) of NdPr oxide supply. MP Materials and Lynas Rare Earths Limited (OTC:LYSDY) are "the only two scaled producers in the West," he added.
Price Action
Shares of MP Materials had risen by 9.28% to $70.69 at the time of publication on Monday.
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