7. MP Materials Corp. (NYSE:MP)
Average Analyst Price Target Upside as of September 12: 45.14%
Number of Hedge Fund Holders: 28
One of the most promising EV battery stocks, MP Materials Corp. (NYSE:MP) has established itself as a key player in the rare earth materials sector with its operations centered on the Mountain Pass mine in California. The company plays an essential role in supplying materials crucial for the EV industry and EV batteries, specifically neodymium and praseodymium oxides.
The elements are vital for creating permanent magnets used in EV traction motors, which are essential for enhancing the efficiency and performance of electric vehicles. In the third quarter of 2023, the company began producing these critical oxides at its Mountain Pass facility. The development is a major step in re-establishing a reliable domestic supply chain for rare earth materials in North America.
The company’s efforts to expand its operations are further supported by an important agreement with General Motors. Announced in December 2021, the long-term supply contract states that GM will receive rare earth materials and magnets sourced and manufactured in the U.S., which is in line with GM’s goal of securing a stable supply chain for its EVs.
MP Materials (NYSE:MP) is also expanding its operations with a new facility in Fort Worth, Texas. The company has commenced production of commercial precursor materials there and plans to manufacture finished magnets by late 2025. The expansion is aimed at enhancing its capacity to meet the rising demand for EV components.
Furthermore, in April, the company received a $58.5 million award from the U.S. Internal Revenue Service and Treasury to support the construction of this facility, which will be the first in the country to produce fully integrated rare earth magnets. General Motors will be a primary customer for the finished products, which will contribute to GM’s North American EV production.
In addition to its production expansion, MP Materials (NYSE:MP) has been refining its rare earths with promising results. In the second quarter, the company produced 272 metric tons of neodymium and praseodymium, with 136 metric tons sold. The company expects production of these rare earths to increase by 50% in the third quarter, driven by a new automotive customer’s demand for these materials in their magnets.
Moreover, the company has demonstrated confidence in its future by approving a significant increase to its share repurchase program. In September, it authorized an additional $300 million for share repurchases, bringing the total to $600 million. The program, which is extended until August 2026, shows the company’s commitment to returning value to shareholders, having already repurchased around 8.6% of its shares for $225.1 million in 2024.
MP Materials (NYSE:MP) has received a consensus Buy rating as per the coverage of 12 analysts. The average price target of $20 implies an upside of 45.14% to the stock’s current price, as of September 12.
At a stake value of $163.044 million, 28 hedge funds held positions in MP Materials (NYSE:MP) in the second quarter. As of Q2, QVT Financial is the top shareholder in the company and has a position worth $44.48 million.
Bernzott Capital Advisors stated the following regarding MP Materials Corp. (NYSE:MP) in its first quarter 2024 investor letter:
“Materials were the leading detractors to performance. Our exposure to MP Materials Corp. (NYSE:MP) was the main culprit, as the stock declined by 28% as prices for their critical commodity output NdPr exhibited weakness due to seasonality factors and lower demand from Electric Vehicles and other industrial applications. Despite the sell-off, we increased our position in the stock as we believe the long-term fundamentals remain intact.”
