The average target price of MP is 28 and suggests 42% downside potential. Usually, this means a SELL recommendation among investment firms, or a recommendation to decrease one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 42.0. This is lower than the current market price, meaning that even the most optimistic analyst does not see upside potential. On the other hand, the most pessimistic analyst has a target price of 18.0. This is equivalent to 63% downside potential in the worst case. 

MP Materials Corp. owns and operates rare earth mining and processing facilities. It owns and operates the Mountain Pass Rare Earth mine located in the Western Hemisphere. The company holds the mineral rights to the Mountain Pass mine and surrounding areas, as well as intellectual property rights related to the processing and development of rare earth minerals. It offers cerium, lanthanum, neodymium, praseodymium, and samarium. The company was founded in 2017 and is headquartered in Las Vegas, Nevada.

MP Materials Corp.

Basic Materials

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

MP reported revenue of USD 216mn in the last 12 months, up 6% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 56% from FY24 to USD -0.65. Market expects EPS to reach USD -0.44 in FY25.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Over the past six months the stock has exceeded the performance of this peer group by 118ppts and its growth accelerated by 72ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is favourable. This generally signifies that a stock is fairly valued or marginally undervalued abd is becoming more 'expensive', suggesting a short-term spike in confidence by the market at large.

The company has reported good EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -16.1% in the last 12 months, a decline from 37.5% in FY23. 

Historically, MP has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -48.4%, down from 9.6% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to -4.7%, below the peers. The consensus estimate for FY24 for RoCE is -2.3%, again behind the peers. 

MP Materials Corp. reported a return on equity (RoE) of -8.7% in the last 12 months, down from 1.8% in FY23. The market consensus projects an RoE of -2.4% in FY24, again behind its peers. 

Another important profitability metric, return on assets (RoA), amounted to -4.4% in the last 12 months, a decrease from 1.0% in FY23. The market analysts predict that RoA will be -1.4% in FY24, again weaker than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.1 in the past several years. This ratio implies a weak shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

MP boasts high trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is unstable and remains extremely favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to slow historical revenue growth, negligible return on capital, weak debt servicing capacity, and an unfavourable capital structure. We note robust profitability and adequate interest coverage, among the positive credit factors. 

In highly turbulent market conditions, MP is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, MP is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Based on key historical and expected multiples, the stock is greatly overvalued relative to its peers. In particular, the stock is 'expensive' on EV/EBITDA. 

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MP Materials Corp.

$ 48.52

2

MP Materials Corp.

$ 48.52

2

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

$ 48.52

About

About

MP Materials Corp.

$ 48.52

2

MP Materials Corp.

$ 48.52

2

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

$ 48.52

About

About

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