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MP Materials Corp. (NYSE:MP) has quickly become a cornerstone of U.S. industrial policy amid America's attempt to decouple from China in critical technology supply chains — and Wall Street analysts are finally catching up to its strategic importance.
Shares of the Nevada-based rare-earth mining company rallied up to 9% on Wednesday, making it the top performer in the Russell 1000 index, after Goldman Sachs initiated coverage with a bullish Buy rating and a $77 price target — a 32% upside from current levels.
• MP shares are climbing with conviction. Check the analyst take here.
Wall Street is getting excited about MP Materials again.
The company owns the only large rare-earth mine in the U.S. and is moving quickly to become a one-stop shop for rare-earth magnets — the small but powerful components needed in electric vehicles, smartphones, wind turbines and defense systems.
In a report shared to clients, Goldman Sachs analyst Peter Oppenheimer called MP one of the most important players in the U.S. supply chain and said it's “becoming the only fully vertically integrated rare-earth company in America.”
That's a big deal because China currently dominates this market, controlling more than 80% of the global supply. The U.S., by comparison, controls less than 3%.
That's where MP comes in — and the U.S. government is backing it.
In July, MP struck a major deal with the U.S. Department of Defense that gives the company $1.55 billion in funding, guaranteed sales of its products, and protection against falling prices.
This includes a minimum price of $110 per kilogram of neodymium-praseodymium (NdPr), the rare earth used to make magnets.
This kind of support is rare in the mining world, according to the investment bank. If the market price of NdPr drops below $110/kg, the government will top up the difference, reducing MP’s exposure to commodity price swings.
Goldman said this deal “derisks” the business and gives investors more confidence in MP's future earnings.
Until recently, MP was digging up rare earths in Nevada and shipping them to China for processing — but that's over. Goldman says the company has "ceased sales of concentrate to China" as it shifts toward full vertical integration, meaning everything from mining to refining to magnet production is now staying on U.S. soil.
By 2030, MP is expected to supply over 50% of America's NdPr demand and around 40% of its magnet needs. Right now, those magnets are mostly made in China. But as demand for electric vehicles and advanced electronics grows, the U.S. needs a domestic supplier.
MP is also working with Apple Inc. (NASDAQ:AAPL) and General Motors Co. (NYSE:GM) to supply magnets and recycle old ones. Apple has already committed over $500 million to the partnership.
Goldman expects MP to grow fast. It sees sales rising at an 80% annual rate between now and 2027, with earnings reaching as high as $1 billion by 2030.
Analysts say the stock deserves to trade at a higher multiple than its peers because it's better positioned, better protected, and moving faster.
Oppenheimer applies a 43-times multiple on forward adjusted EBITDA, saying MP's role in national security and clean tech justifies a higher price, up to an $18.1 billion equity value, or $77 per share.
"This is no longer just a mining story," Goldman wrote.
"MP is positioned to be the only vertically integrated rare earth magnet supplier at scale in North America."
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