Lynas Rare Earths shares rally as UBS upgrades stock to ‘buy’
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The news: Lynas Rare Earths shares were higher in afternoon trade after UBS analysts upgraded their rating on the stock from ‘neutral’ to ‘buy’ and raised its 12-month price target by nearly 18%.
The numbers: At 2:47pm AEDT, shares in Lynas Rare Earths gained 6.1% to $15.51 as UBS analysts raised their price target from $15.10 to $17.80.
In a research note, the UBS analysts also flagged that spot Neodymium-Praseodymium (NdPr) prices rallied 40% year to date. UBS is also forecasting a long-term ex-China price for the rare earths of USD100 ($154.31) per kilogram, above the USD77 per kilogram currently priced in by Lynas’ modelling.
The context: UBS analysts visited the Lynas Advanced Materials Plant in Malaysia and walked away with an “incrementally positive” view on the company's position in the country and “the broader value chain”.
This includes the “understated advantage in a particularly complex field” of having a low-turnover workforce in Malaysia, with more than 70% of employees having spent more than 10 years working at the plant.
The analysts also expect the facility’s heavy rare earth expansion will eventually lift revenue by roughly $700 million or about 27% incremental revenue from FY28. This depends on an 18 month build time and continued scarcity and prioritisation of heavy rare earths.
The source: UBS research
