Lynas Rare Earths (ASX:LYC) reported third-quarter production and sales that missed analyst expectations, but the results were overshadowed by significant shifts in the heavy rare earths market, according to a Friday note from Euroz Hartleys.

On April 28, the company produced 1,510 tonnes of neodymium and praseodymium (NdPr) and 1,910 tonnes of total rare earth oxides (TREO), both falling short of Euroz Hartleys' forecast of 1,620 tonnes of NdPr and 2,700 tonnes of TREO.

Sales volumes also missed estimates, coming in at 2,430 tonnes of TREO versus the expected 2,700 tonnes, Euroz Hartleys said.

However, the company also said it will start production of separated dysprosium (Dy) and terbium (Tb) oxides in May and June, respectively, marking its entry into the heavy rare earths segment and setting the company apart as the "only commercial producer of separated Heavy Rare Earth products outside China."

Euroz Hartleys notes this shift as the "focal point", particularly in light of China's newly imposed export restrictions on heavy rare earths (HREs) and related products, which have halted exports of rare earth magnets containing HREs.

Lynas' pricing also reflects high demand outside of China, distinguishing itself from existing in-China price indexes, which are now considered irrelevant due to the changing market dynamics.

Euroz Hartleys maintained Lynas Rare Earth's buy rating and its price target of AU$9.20 per share.

Shares of the company rose 2% in recent Monday trade.