Investment bank Needham has initiated coverage on MP Materials Corp. (MP.US) and USA Rare Earth Inc. (USAR.US), assigning a "Buy" rating to both with price targets of $81 and $39 respectively.

Following the news, both rare earth concept stocks saw gains in Monday's trading session, closing up 7.09% and 5.07%.

Focus on MP Materials

For MP Materials, Needham analyst Carter Goman views the company as the "clear leader" in the sector, possessing a "first-mover advantage" as the Western Hemisphere's largest producer of rare earth materials.

He believes the rare earth industry is at the beginning of a multi-year investment cycle, driven by an increasingly fragmented global supply chain.

The analyst stated that, despite numerous announced plans for new capacity in the market, MP Materials has one of the highest probabilities of success in achieving its goals, given the established operations at its Mountain Pass mine and the strength of its management team.

As we progress through the latter half of this decade and into the 2030s, market focus should shift back to demand growth, including broader electric vehicle adoption and the expanding scale of future humanoid robot deployments, the analyst wrote.

Perspective on USA Rare Earth

For USA Rare Earth, the analyst believes the company has assembled a unique portfolio of assets across the entire industry value chain, coupled with a strong management team.

This positions it to potentially become a leading player in the long-term trend of reducing the rare earth permanent magnet supply chain's dependence on China.

The analyst noted that with the acquisition of Serra Verde expected to close in the third quarter, ongoing integration of the LCM business, and plans for initial magnet product shipments to customers starting in the second half of 2026, USA Rare Earth is "on the cusp of a major capacity ramp."

He pointed out that as these projects are gradually realized, USA Rare Earth is poised to build a more complete domestic rare earth and magnet supply chain in the US and benefit from the global supply chain restructuring trend.