Shares in rare-earth materials and magnets company MP Materials (MP +2.73%) rose by 12.3% in the week to Friday morning. The move comes as a BMO analyst upgraded his target on the stock from "hold" to "buy" and gave it a $75 price target.
A buying opportunity
The upgrade comes after a recent sell-off off which the analyst believes is creating a useful entry point. Moreover, the company's long-term fundamentals could be enhanced by the recent partnership announced with the Department of Defense (DoD) and the Saudi Arabian Mining Company (Maaden). The deal involves a joint venture between the DoD and MP Materials, which will hold a 49% stake in a joint venture with Maaden to build a rare-earth refinery in Saudi Arabia.
NYSE: MP
Key Data Points
Not only is the deal positive in itself, but it also strengthens the public-private partnership with the DoD and cements MP Materials' strategic importance in helping the U.S. secure a domestic supply of rare-earth materials and magnets.
As a reminder, MP Materials signed a transformative deal with the DoD in July that included a $400 million investment from the DoD and a decade-long agreement to buy rare-earth magnets from the company. A few days later, the company announced a $500 million partnership with Apple to supply the consumer electronics giant with rare-earth magnets.
Image source: Getty Images.
Where next for MP Materials
While it's incredibly difficult to predict where rare-earth materials and magnet prices will be, and MP Materials faces political and execution risk (mainly around building and expanding facilities), the company's future looks bright, and brighter still every time the trade conflict with China (which dominates the rare-earth market) flares up.
