A Rare-Earth Stock Is Rising Again. Wall Street Is Playing Catch-Up.

A dump truck at a mine operated by MP Materials. (Joe Buglewicz/Bloomberg)

Shares of rare-earth firm MP Materials rose again Monday. Estimates are moving higher —a lot higher—after the blockbuster deal with the Defense Department.

MP Materials stock added 7.6%, closing at $48.52 on Monday, while the S&P 500 and Dow Jones Industrial Average rose 0.1% and 0.2%, respectively.

A week ago, MP Materials stock was about $31. That was before the company announced a deal with the Pentagon that provided capital for more capacity and floor pricing for MP Materials’ products, which sent shares skyrocketing.

The move was part of the Defense Department’s plan to help wean the U.S. off Chinese-produced rare-earth metals.

Rare-earth materials end up in things such as magnets for electric motors and in navigation equipment. China currently dominates rare-earth mining. In 2024, it mined about 270,000 metric tons of rare-earth oxides out of a worldwide total of 390,000 metric tons. It also controls about 85% of global rare-earth refining capacity.

MP Materials is the largest producer of rare earths in the Western Hemisphere, making neodymium and praseodymium oxides, two rare-earth elements among a list of more than a dozen. It has long been a play on U.S. rare-earth manufacturing, and relatively popular on Wall Street.

Eight out of 11, or 73%, of analysts covering the stock have Buy ratings, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.

Analysts have had trouble keeping up with recent developments, however. Until recently, the average analyst price target was only about $25. Targets have started moving up after the deal. Friday, Canaccord analyst George Gianarikas more than doubled his price target for MP Materials stock to $55 from $27. He kept a Buy rating.

Monday, Baird analyst Ben Kallo took his price target to $52 from $32. He rates shares at Buy, as well.

“The partnership with the DoD has given a material increase in visibility into MP’s future magnetics production and financial profile,” wrote Kallo. “We expect valuation to become a bigger pushback, but note that additional catalysts ahead include partnership announcements for magnetics, third-party feedstock, M&A, and/or delivering finished magnets to General Motors later this year.”

He values MP Materials at 20 times his estimated 2027 earnings before interest, taxes, depreciation, and amortization, or Ebita, adding that shares of Australian peer Lynas trade for about 12 times estimated 2027 Ebitda.

Kallo projects a 2027 Ebitda of about $554 million. The Wall Street consensus aggregated by FactSet is $300 million. The consensus is up from closer to $200 million a few days ago. Estimates will keep rising while Wall Street updates its financial models.

Through Monday, MP Materials stock was up about 217% over the past 12 months.

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