Rare earth materials have been very much in the news lately, particularly with the recent U.S.-China trade spats. Because of this, the only rare earth miner native to our country, MP Materials (NYSE: MP), has come on the radar of many investors in recent months.
Happily for those individuals, MP Materials stock had quite a memorable Monday. Thanks in no small part to an analyst's recommendation upgrade, the shares rose by nearly 10% across that trading session. That compared well to the benchmark S&P 500's (SNPINDEX: ^GSPC) 1.5% bump higher.
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A shift to a bullish stance
The upgrading party was Deutsche Bank. Before market open, the bank's Corinne Blanchard raised her evaluation of MP Materials' equity to a buy from her previous hold. She also made a slight increase to her price target, which now stands at $71 per share from $68.
Image source: Getty Images.
According to reports, Blanchard's new take is based on her view that rare earths will continue to be valuable materials in the middle-to-long time frames. This, combined with the fact that MP Materials is backed by the federal government, makes it a compelling buy.
In July, the Department of Defense (DoD) signed an agreement with the company, under which it promised an equity investment and price floors, among other supportive measures.
Bottom-line beat
It also doesn't seem coincidental that Blanchard's upgrade comes mere days after MP Materials reported third-quarter results. The company booked revenue of $53.6 million, which was down by 15% year over year and missed the consensus analyst estimate.
However, the company managed to narrow its net loss not according to generally accepted accounting principles (GAAP). This deficit was $17.8 million, or $0.10 per share, against the year-ago shortfall of $19.6 million. That $0.10 was much narrower than the $0.17 collectively modeled by those prognosticators.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends MP Materials. The Motley Fool has a disclosure policy.