Al Root

Shares of rare-earth miner MP Materials just won't stop. They were higher in Wednesday trading, again.

It's been a wild few days for investors in what feels like an unprecedented situation. Valuing a company changing as fast as MP Materials is no easy feat.

MP Materials stock was up 3.1% in early trading at $60, while the S&P 500 was flat and the Dow Jones Industrial Average was up 0.1%.

Current levels would be a record close. Shares traded just under $63 on Tuesday, setting a record high. Through early trading, shares were up about 73% over the past week, and more than 250% year to date.

The run has been remarkable. It isn't hard to figure out what happened. For starters, threats by China to restrict rare-earth exports amid rising trade tensions with the U.S. have put investors' focus on domestic production of rare-earth metals, a list of more than a dozen elements that end up in items such as magnets and displays.

China dominates rare-earth materials, refining some 85% of the global total. MP Materials is the largest rare-earth producer in the Western Hemisphere, making neodymium and praseodymium oxides, used in high-end magnets. Some of its raw materials end up in China, but that's changing. MP Materials refines about 40% of its feedstock now.

The China scare developed into real business consequences. The Defense Department and Apple both signed deals with MP Materials, providing capital for access to non-Chinese material. The deal with the Pentagon included a price floor for MP Materials' product to ensure that China couldn't flood the market, depressing rare-earth prices and weighing on MP Materials' returns.

It's all good news, but it left investors in a tough spot. How do they value a company's stock that essentially tripled in price overnight with a completely new pricing structure? Baird analyst Ben Kallo now projects 2027 earnings before interest, taxes, depreciation, and amortization, or Ebitda, of $554 million. The Wall Street consensus aggregated by FactSet was closer to $200 million just a few days ago.

Kallo's estimate values MP Materials at about 20 times 2027 Ebitda. Southern Copper trades for about seven times estimated 2027 Ebitda. Investors expect more growth in U.S. rare-earth production and consumption than for copper, however. Australia's rare-earth miner Lynas is valued at about 13 times estimated 2027 Ebitda.

How high MP Materials estimates will go with the template for supply deals laid out by the Pentagon is anyone's guess. What investors know for sure is that things are good right now for MP Materials.

Overall, 73% of analysts covering the stock have Buy ratings. The average Buy-rating ratio for stocks in the S&P 500 is about 55%, according to FactSet. The average analyst price target, however, is just $38. Wall Street has had trouble catching up.

Canaccord's George Gianarikas on Tuesday raised his target price to $64, the highest on the street. Just last week he had raised it to $55.

Write to Al Root at allen.root@dowjones.com

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July 16, 2025 12:29 ET (16:29 GMT)

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