MP Materials is one stock that could benefit as the Trump administration tries to bring the production of rare earths closer to home, according to Morgan Stanley. The bank upgraded the rare-earth miner to an overweight rating from in-line. Analyst Carlos De Alba also raised his price target to $71 from $68.50. Shares of MP Materials have surged 296% this year. De Alba’s updated forecast equates to further gains of 15% ahead. MP YTD mountain MP YTD chart As a catalyst, De Alba pointed to MP’s development of a “fully domestic rare earth mine-to-magnet supply chain in the U.S.,” putting it in the prime position to benefit as the U.S. tries to develop ex-China supply chains. While Beijing has paused its rare earth restrictions for a year, De Alba said that this does not solve critical mineral or dependency issues from the U.S.’s part, or resolve the length and cumbersome process to obtain export licenses. “Geopolitical tensions, although temporarily subdued, continue to raise doubts about the supply of these critical components and elevate MP’s strategic value, as evidenced by the historic deal with the Department of Defense this summer and more recently with the JV between the DoD, MP and Ma’aden,” the analyst wrote. He highlighted MP’s recent deal with the U.S. Department of Defense and Saudi Arabian mining company Maaden as a recent tailwind. Under this agreement, the Defense Department will finance the U.S. portion of the development of a rare earth refinery in Saudi Arabia. Another benefit is that this deal provides MP with “significant flexibility in the upstream at zero capital costs.” To De Alba, this deal is proof of the “U.S. having effectively chosen MP Materials as the U.S. solution.” The deal also underscores MP’s vertical integration strategy to go from mine to magnet production, making it the only global fully integrated supplier of permanent magnets, the analyst added.
