MP Materials Stock Soars Even Higher on Earnings. The Future Looks Bright, Too.

MP Materials operates the Mountain Pass mine in California. Shares have jumped this year amid rising trade tensions between the U.S. and China. (Joe Buglewicz/Bloomberg)

Rare-earth miner and refiner MP Materials delivered better-than-expected second-quarter numbers on Thursday, sending shares up again.

For the quarter, MP reported earnings before interest, taxes, depreciation, and amortization, or Ebitda, of negative $12.5 million from sales of $57.4 million. Wall Street was looking for an Ebitda of about $20 million from sales of about $46 million. A year ago, in the second quarter of 2024, MP reported an Ebitda loss of about $27 million on sales of about $31 million.

Shares added 4.6% on Friday, closing at $74.32. The stock traded as high as $79.36, a new 52-week and all-time high.

A beat is nice, but current results don’t matter all that much in the grand scheme of things. Investors are focused on the future with MP stock. They remain optimistic about that future.

To call the past few months good for the company would be a significant understatement. Through trading Thursday, MP stock was up roughly 200% over the past three months. The average Wall Street price target on the shares went to about $60 from $27 over that span.

Current quarterly results didn’t drive those gains. A transformational deal with the Department of Defense catalyzed all that. In July, the Pentagon agreed to a $400 million equity investment, a commitment for up to $350 million in additional funding, and a $150 million loan. The money will fund the construction of a new domestic rare-earth magnet-manufacturing facility and the expansion of MP Materials’ current mining and processing capabilities.

Rare earths are more than a dozen elements that end up in many high-tech products in both the civilian and military worlds. China, over time, has come to dominate the production of rare-earth materials with an estimated 85% of global refining capacity.

The Defense Department has long planned to reduce American dependence on Chinese capacity. Those plans may have accelerated amid rising trade tensions between the two nations.

The agreement provides MP a pathway to some $650 million in annual Ebitda by the end of the decade. Ebitda is projected to be a $20 million loss in 2025, according to FactSet.

The Defense Department deal made the quarterly numbers feel like an “afterparty,” wrote Canaccord analyst George Gianarikas in a Thursday report. “Toned-down, less fanfare, some finger food, quiet socializing and mingling, but still a good time.”

Gianarikas rates shares Buy and raised his price target to $77 from $64 as he continues to “fine-tune” his modeling assumptions.

Though MP is transforming itself, showing progress is always good. The company’s magnetics segment generated positive Ebitda of $8.1 million on sales of almost $20 million. The company didn’t make magnets from its rare-earth materials in the second quarter of 2024.

Looking ahead, investors will want to hear more details about new capacity, profitability, and how MP management can expand its business beyond the Defense Department. The company also has agreements for rare-earth supply with Apple and General Motors.

Recent gains haven’t left shares cheap. They currently trade for roughly 30 times estimated 2027 Ebitda. Shares of Australian rare-earth miner Lynas Rare Earths trade for about half that.

One interpretation of that premium is that investors expect MP’s position as the largest rare-earth miner in the Western Hemisphere to yield additional business gains not yet reflected in estimates.

MP stock closed up 5.3% at $71.07 on Thursday, ahead of earnings, while the S&P 500 and Dow Jones Industrial Average fell 0.1% and 0.5%, respectively.

Write to Al Root at allen.root@dowjones.com