MP: Saudi Refinery Venture Will Drive Future Profitability And Upside Potential

Analysts have nudged their price target on MP Materials slightly higher to approximately 79.29 dollars from about 79.11 dollars, citing modestly stronger long term revenue growth expectations. These expectations more than offset a small downward tweak to projected profit margins and a marginally higher discount rate.

What's in the News

• MP Materials formed a strategic joint venture with Saudi Arabian Mining Company (Maaden) and the U.S. Department of War to build a rare earth refinery in Saudi Arabia, aiming to diversify and secure global rare earth supply chains while maintaining U.S. oversight and national security alignment (company announcement).
• The new Saudi refinery will process feedstock from Saudi Arabia and other regions to produce both light and heavy rare earth oxides, expanding MP Materials refining capacity and global footprint in a capital light manner (company announcement).
• MP Materials reported third quarter 2025 production results, with total REO volumes slightly lower year over year but NdPr production increasing significantly to 721 MT from 478 MT, highlighting progress in higher value downstream output (operating results filing).
• The company guided to a return to profitability starting in the fourth quarter of 2025 and beyond, signaling an expected inflection in earnings despite recent margin and pricing pressures (earnings guidance).
• MP Materials expanded its public private partnership with the U.S. Department of Defense, securing multibillion dollar support to build a second U.S. rare earth magnet facility that should lift total domestic magnet capacity to about 10,000 metric tons once commissioned, while adding heavy rare earth separation capabilities at Mountain Pass (client announcement).

Valuation Changes

• The fair value estimate has risen slightly to approximately 79.29 dollars from about 79.11 dollars, reflecting a modest upward revision in intrinsic valuation.
• The discount rate has increased slightly to about 8.34 percent from roughly 8.24 percent, implying a marginally higher required return and risk assessment.
• Revenue growth has improved slightly to around 59.48 percent from about 59.38 percent, indicating a small upgrade to long term growth expectations.
• The net profit margin has edged down slightly to roughly 29.48 percent from about 29.53 percent, reflecting a minor reduction in long run margin assumptions.
• The future P/E has risen slightly to approximately 78.61 times from about 78.21 times, signaling a marginally higher valuation multiple on expected earnings.