A Look at MP Materials’s Valuation Following Major U.S.-Saudi Rare Earth Joint Venture Announcement

MP Materials (NYSE:MP) just announced a high-profile joint venture with the U.S. Department of War and Saudi Arabia’s Maaden to build a rare earth refinery in the Kingdom. This strategic move elevates MP’s role in diversifying and securing global rare earth supply chains.

See our latest analysis for MP Materials.

Momentum around MP Materials has accelerated with headline-grabbing partnerships and a surge in investor interest, including a fresh strategic stake from Gina Rinehart. The stock’s latest joint venture news has played straight into strong trends. A year-to-date share price return of 255% and a one-year total shareholder return of 187% reflect mounting optimism about MP’s expanding global role and growth prospects.

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Yet with MP Materials’ rapid ascent and bullish forecasts, are investors facing an undervalued play on strategic minerals, or has the market already priced in every bit of future upside? Is this a fresh buying opportunity, or has optimism run ahead of fundamentals?

Most Popular Narrative: 27.9% Undervalued

With MP Materials trading at $58.21 at the last close, the most popular narrative sets a fair value notably higher, suggesting significant upside based on its anticipated growth and industry positioning.

The company is expanding its vertically integrated processing and magnet manufacturing capacity with the "10X" plant and a modular recycling facility. Along with significant CapEx support from Apple and the DoD, these initiatives are expected to capture more value-added margins and may improve net profit and operating leverage as downstream operations ramp up.

Read the complete narrative.

Curious how this fair value is calculated? There is one standout metric the narrative relies on, promising a rapid rise in profits and margins few expect. Want to find out which aggressive projections underpin these targets? Read the narrative in full to see what is driving such an optimistic view.

Result: Fair Value of $80.77 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rapid expansion plans and heavy reliance on a small number of major customers mean that unexpected delays or order changes could challenge MP's growth story.

Find out about the key risks to this MP Materials narrative.

Another View: Looking at Market Comparisons

While analysts project major upside, market-based ratios tell a more cautious story. MP’s price-to-sales ratio sits at an eye-popping 44.3 times, significantly higher than both peers (0.7x) and the US mining industry average (2.1x). If the stock moves closer to its fair ratio of 2.5x, the current price may carry hefty valuation risk. Which side of the story will win out?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own MP Materials Narrative

If you want a different perspective or prefer hands-on analysis, you can dive into the data and assemble your own view in just a few minutes. Do it your way

A great starting point for your MP Materials research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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