Molycorp (MCP) Price Target Cut To $70 By CIBC Following Molymet Investment
Thursday, February 02, 2022 10:56 AM

CIBC World Markets Inc. lowered its price target on Molycorp Inc. (NYSE:MCP), a rare earth oxide (REO) producer, to US$70.00 from US$80.00, following the sale of a 14.5 percent stake to Molymet.

Matthew Gibson, an analyst at CIBC, said Molycorp's sale of 12.5 million shares helps to lower the technical and financial risk of starting up the Mineral Park processing plant even further. The additional capital will help cushion any cost overruns related to the speeding up of construction as well as building out downstream capacity, he added.

The $390 million from the financing could be used to increase metal and alloy capacity to closely align with Mountain Pass' separated rare earth oxide production, Gibson said.

"Stabilizing RE prices combined with production execution in 2012 will be important for MCP to gain a re-rating to producer status," Gibson wrote in a note.

Gibson, who has a "Sector Outperformer" rating on the stock, revised his 2011 EPS estimate for the company to US$1.49 from US$1.68 and 2012 EPS estimate to US$1.43 from US$2.13.

The stock, which has been trading between $23.05 and $79.16 over the past year, is down 0.10 percent at $29.67 on Thursday.