MP Materials (MP) is "well positioned" to benefit as the US looks to develop a robust ex-China supply chain with the company at the center, Morgan Stanley said in a Friday note.

Geopolitical tensions between the two countries, although temporarily subdued, has continued to raise doubts about the supply of critical components, thus, elevating MP Material's strategic value, Morgan Stanley said.

Morgan Stanley further said that the deal signed between the company and US Department of Defense earlier this year was a result of the company's strategy to go all the way from mine to magnet production, making MP Materials a fully integrated supplier of permanent magnets globally.

The firm upgraded MP Materials to overweight from equalweight and adjusted its price target to $71 from $68.50.

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