MP Materials (NYSE:MP) might have little to do with AI but that hasn’t held back shares of the US–based rare‑earth materials’ company this year. The stock has been one of the year’s star performers. The extent of the rally is clear: despite sitting 37% below its 52-week peak, the shares are still up by 307% year-to-date.
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9% of those gains were added in Wednesday’s session after the company announced a deal with the U.S. Department of Defense and Saudi Arabia’s mining company, Maaden, to build a rare-earth refinery in the country. MP and the Pentagon will jointly hold 49% of the venture, while Maaden will own at least 51%. The Defense Department will fund the U.S. share, and MP will contribute its technical and marketing expertise.
Recall, in July, the Pentagon and MP signed a significant agreement that includes an equity stake, a price floor, and an offtake arrangement. The investment in MP is part of the Trump administration’s push to cut U.S. reliance on Chinese rare-earth imports and build a domestic supply chain.
MP is the largest rare-earth producer in the Western Hemisphere, primarily focusing on neodymium-praseodymium (NdPr) oxide. This material is essential for producing permanent (NdFeB) magnets used in electronics, electric vehicles, defense systems, and other applications that are vital to major components of U.S. manufacturing.
Goldman Sachs analyst Brian Lee thinks the company is poised to control over 90% of North America’s NdPr production. This makes MP uniquely positioned to capture market share from China-based producers and refiners as domestic manufacturers seek to diversify their supply chains. The company has offtake agreements with GM for magnets and with Apple to expand recycling capabilities alongside magnet production. Moreover, the strategic partnership with the U.S. Department of War supports accelerated growth in downstream magnet production, while NdPr sales through power purchase agreements (PPAs) ensure a minimum price, mitigating commodity risk. “As a result,” says Lee, “we expect the accelerated vertical integration to drive meaningful profitability and sales growth into the end of the decade.”
The company anticipates that its mine-to-magnet approach will “unlock significant value” as it anticipates to lower input costs for its magnet facilities. Furthermore, MP highlighted that 70% of its targeted magnet capacity already has guaranteed offtakes from the Department of War, with potential upside if sales are redirected to third-party customers.
Additionally, Lee thinks recycling is set to be a “strategic flywheel,” accelerated via its partnership with Apple. Lee believes the company plans to develop a recycling facility to support Apple’s magnet production. Once current expansion plans are completed, MP could potentially scale up the recycling operation, using magnet waste as its own feedstock. Over time, this approach could result in a “value creating flywheel.”
All that is to say Lee initiated coverage of MP stock with a Buy rating and $77 price target, suggesting the shares will post gains of 21% over the next year. (To watch Lee’s track record, click here)
Most of Lee’s colleagues take a similar stance; based on a mix of 11 Buys vs. 3 Holds, the analyst consensus rates the stock a Strong Buy. The forecast calls for 12-month returns of 28%, considering the average target clocks in at $81.19. (See MP stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.