MP Materials Stock Upgraded, Price Target Cut. What It Says About Rare-Earths Plays.

MP Materials CEO James Litinsky sits on a panel discussing U.S. rare earth independence at an event in Washington, D.C., in April 2025. (Getty Images for 137 Ventures/Founders Fund/Jacob Helberg)

MP Materials stock jumped on Monday after the rare-earth materials producer caught an upgrade with a caveat of sorts.

The upgrade came with a lower price target, which sums up trading activity in the rare-earth sector.

BMO Capital analyst Raj Ray raised his rating to the equivalent of Buy from Hold. His price target to $75 from $76.

Shares added 6.8%, closing at $59.04, on Monday, while the S&P 500 and Dow Jones Industrial Average gained 1.6% and 0.4%, respectively.

While rare-earth prices have dropped as trade tensions with the U.S. and China have eased, America’s rare-earth vulnerability “has become blatantly apparent, and we do not think this weakens the long-term thematic [trend],” wrote Ray.

This past week, MP, the Defense Department, and the Saudi Arabian mining company, Maaden, announced a joint venture for the refining of rare-earth elements in Saudi Arabia. MP doesn’t have to provide capital, only expertise.

On the deal, from Ray: “After accounting for the potential upside from the Saudi Arabia joint venture and the stock’s recent pullback, we believe the current valuation offers an attractive entry point. ”

An upgrade with lower price target is unusual, but MP stock has been whipsawed by U.S.-Chinese trade tensions. Shares traded north of $100 in early October after China threatened to restrict rare-earth exports. China dominates rare-earth mining with an estimated 85% of global processing capacity. Shares came back to Earth as U.S.-Chinese trade negotiations included an agreement to keep shipping rare-earth materials.

MP stock is down 22% over the past month. Still, it’s up more than 250% this year.

With the upgrade, 88% of analysts covering MP stock rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target is about $79 a share, up more than 40% from Friday’s closing price.

Chinese threats to restrict the supply of the materials needed to make everything from iPhones to fighter jets have focused the U.S. government’s attention on developing a domestic rare-earth supply chain.

In July, the Defense Department announced a deal with MP designed to dramatically increase production of rare-earth products. It included an equity stake, a price floor for rare-earth materials, and a guaranteed customer for rare-earth magnets that MP is building capacity to make.

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