TLDR
- MP Materials stock jumped 8.5% Thursday morning after China announced new export restrictions on rare-earth metals
- BMO Capital reinstated coverage with a Market Perform rating and $76 price target, citing the company’s Defense Department partnership
- The DoD agreement provides price floors, minimum EBITDA margins, and guaranteed magnet sales
- Analysts project earnings of $0.68 per share in 2026, potentially tripling to about $2 per share by 2028
- Stock trades at $73.94 with a market cap of $13 billion, representing 110x forward earnings
MP Materials stock rose sharply Thursday after China announced fresh restrictions on rare-earth metal exports. Shares climbed 8.5% through late morning trading, reaching $73.94.
China’s Commerce Ministry said it will require government approval for exports of products containing certain rare-earth metals. This marks the latest move in ongoing trade tensions with the United States.
China controls 69% of global rare-earth production. The country also dominates refining at 85% and rare-earth magnet manufacturing at 90%.
These near-monopolies give China leverage in trade negotiations. The country has used export restrictions as a tool to pressure the U.S. on tariff policies.
For MP Materials, China’s actions create opportunity. The company operates the largest rare-earth mining operation in the United States at its Mountain Pass facility in California.
Defense Department Partnership Changes the Game
BMO Capital reinstated coverage on MP Materials Thursday with a Market Perform rating. The firm set a price target of $76 per share.
The analyst cited what they called a “transformational partnership” with the Department of Defense. This agreement provides several financial protections for MP Materials.
The DoD deal includes price floors for the company’s products. It guarantees minimum EBITDA margins and ensures magnet sales to government buyers.
The partnership also provides capital for MP’s expansion plans. This funding supports the company’s vertical integration strategy from mining through magnet production.
BMO Capital called MP Materials “the U.S.’ rare earth champion.” The stock has gained 352% year-to-date.
Other analysts have adjusted their targets recently. Jefferies raised its price target to $90, while DA Davidson increased its target to $82 from $32.
Earnings Growth Expected But Valuation Concerns Remain
Analysts polled by S&P Global Market Intelligence project MP Materials will earn $0.68 per share in 2026. That figure could nearly triple over the following three years.
The company currently operates near break-even. Revenue growth depends on ramping up magnet production capacity.
At $73.94 per share, MP trades at more than 110 times projected 2026 earnings. This valuation puts the stock at the expensive end of the spectrum.
BMO Capital assigned a Market Perform rating despite the positive DoD partnership. The firm believes the market has already priced in future earnings visibility.
The Department of Defense filed paperwork allowing potential resale of up to 24.5 million MP Materials shares. The filing doesn’t indicate immediate selling plans.
MP Materials wouldn’t receive proceeds if the DoD sells its stake. The Trump administration has discussed redirecting $2 billion from the CHIPS Act toward critical minerals projects.
This funding could reduce U.S. dependence on Chinese rare-earth imports. MP Materials would likely benefit from any such policy shift.
