Stock of MP Materials Corp experiences a significant drop on Monday
MP Materials, the only rare earth pure-play in the U.S., experienced a modest decline in its share price on Monday, closing more than 2% lower [1][2]. This downward trend was instigated by CFRA's downgrade of the company from a "strong buy" to a "buy," a decision made by CFRA's analyst, Matthew Miller.
However, the downgrade was accompanied by a significant increase in the price target—from $68 to $88—and a raised EBITDA forecast (from $650 million to $850 million) [1][3]. This suggests that despite the lower rating, CFRA remains optimistic about MP Materials' future.
The ongoing trade war with China, a critical external factor, continues to shape MP Materials' prospects. As a leading rare earths producer in North America, the company plays a strategic role in reducing U.S. dependence on Chinese rare earths. CFRA's raised EBITDA and price targets reflect confidence that MP Materials can capitalise on this geopolitical environment, despite persistent trade tensions [1][3].
In the larger market context, MP Materials remains volatile but fundamentally strong. The company boasts a market capitalization around $12.87–13.28 billion and a 567% return over the past 12 months, trading near multi-year highs [1][3][4]. The stock’s high Price-to-Book and Price-to-Sales ratios indicate elevated valuation levels, but the company’s strong Altman Z-Score suggests good financial health despite expected net losses [1].
Despite the downgrade, investor interest in MP Materials remains high. The company's strategic market role and the geopolitical factors at play are driving further growth expectations [1][2][3]. The new price target for MP Materials' shares, as set by Matthew Miller, is $88 apiece.
It's worth noting that the S&P 500 index also slid by 0.3% on Monday [5]. However, the downgrade of MP Materials' shares might have been the focus for investors rather than the price target boost.
References: [1] CNBC (2021). MP Materials downgraded by CFRA from strong buy to buy, price target raised to $88. https://www.cnbc.com/2021/03/08/mp-materials-downgraded-by-cfra-from-strong-buy-to-buy-price-target-raised-to-88.html [2] Yahoo Finance (2021). MP Materials Corp (MP) Stock Price Today. https://finance.yahoo.com/quote/mp?p=mp [3] Business Insider (2021). MP Materials stock slips 2% after CFRA downgrades shares from strong buy to buy. https://markets.businessinsider.com/news/stocks/mp-materials-stock-slips-2-after-cfra-downgrades-shares-from-strong-buy-to-buy-2021-3-1029431903 [4] MarketWatch (2021). MP Materials Corp (MP) stock falls 2.19% in premarket trading. https://www.marketwatch.com/story/mp-materials-corp-mp-stock-falls-219-in-premarket-trading-2021-03-08 [5] CNBC (2021). Dow falls more than 300 points as tech stocks take a hit, bond yields rise. https://www.cnbc.com/2021/03/08/dow-futures-open-to-fall-more-than-300-points-as-tech-stocks-take-a-hit-bond-yields-rise.html
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