MP Stock Rises Overnight After Freedom Broker’s Upgrade: Why The Analyst Sees 40% Upside

• Freedom Broker upgraded MP Materials to ‘Buy’ from ‘Hold,’ trimming its price target to $51.
• The firm still sees 40% upside potential on an attractive valuation and expected cost savings. 
• Q3 revenue jumped 176% to $147.7 million, while NdPr output rose 41%. 

MP Materials Corp. (MP) stock climbed overnight after Freedom Broker upgraded the stock to ‘Buy’ from ‘Hold’, even as it lowered its price target. Analyst Vitaly Kononov sees around 40% upside, citing an attractive valuation, expected production cost savings, and upcoming fourth-quarter (Q4) magnet and heavy rare earth production milestones.

MP Materials stock traded 2.3% higher overnight, ahead of Wednesday. 

Read Next

Netlist CEO Hints Licensing Deal With SK Hynix Is In Works After Q3 Sales Rise 150%: Retail Turns Bullish

Yuvraj Malik

MP Materials’ Upgrade Comes With Lower Price Target

On Tuesday, Freedom Broker upgraded MP Materials to ‘Buy’ from ‘Hold’ while reducing its price target to $51 from $57. The revised target still indicates about 40% upside from the stock's last closing price. 

Kononov said MP Materials' Q3 results and management comments improved his narrative about the company. He believes the stock is attractively priced and could rise further following its earnings report. 

MP Materials' efforts to bring down operating expenses played an important role in the firm’s decision to upgrade the stock. In particular, the company is developing a proprietary chlor-alkali facility that Freedom Broker expects to help reduce costs associated with neodymium-praseodymium (NdPr) production as its operations expand.

NdPr is a key ingredient in permanent magnets used across electric vehicles, wind turbines, robotics, and other industrial applications. Lower production expenses could strengthen MP Materials' competitive position as it scales its rare earth business.

MP Materials' Q4 Production Milestones In Focus

The analyst also considered MP Materials' upcoming production plans. The company expects to start shipping magnets in Q4 and begin commercial production of dysprosium and terbium, two important rare earth materials. 

These milestones could help demonstrate the company's progress toward expanding its position across the rare earth supply chain.

In Q3, MP Materials’ revenue surged 176% year-on-year to $147.7 million. 

NdPr output reached 1,018 metric tons, up 41% year-on-year. Sales volumes climbed 94% to 1,020 metric tons, reflecting an uptick in production and stronger demand. 

Adjusted EBITDA swung to $41.1 million from a $12.6 million loss last year. However, MP Materials continued to report a net loss. The company reported adjusted earnings of $0.04 per share against an estimate of a $0.01 loss per share, according to Fiscal.ai. 

MP stock: Retail View 

On Stocktwits, retail sentiment around the stock slipped to ‘bullish’ from ‘extremely bullish’. 

MP  stock has declined 27% year-to-date. 

Read Next: SE Stock Rises Overnight: Retail Shrugs Off Shopee Owner Sea’s EPS Miss — ‘Short-Term Pain For Long-Term Gain’

For updates and corrections, email newsroom[at]stocktwits[dot]com.