MP Materials (MP): Has the Rare Earth Rally Left the Stock Undervalued or Overpriced on Sales?

MP Materials (MP) has quietly staged a sharp rebound this year, even as the stock has slid over the past month and past 3 months, leaving investors debating whether this pullback offers value.

See our latest analysis for MP Materials.

That pullback sits against a powerful backdrop, with the share price up sharply on a year to date basis and the one year total shareholder return near 191 percent, suggesting long term momentum is still intact even as short term sentiment cools.

If MP’s rare earth rebound has your attention, it may be a good moment to broaden your watchlist and explore aerospace and defense stocks as potential next opportunities.

With shares still heavily off analyst targets despite surging returns, investors are asking whether MP’s rare earth revival represents a classic value disconnect, or whether the market has already priced in the next leg of growth.

Most Popular Narrative: 32.6% Undervalued

With MP Materials last closing at 53.42 dollars versus a narrative fair value around 79.29 dollars, the spread hinges on aggressive growth and margin assumptions.

The analysts have a consensus price target of $77.0 for MP Materials based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $85.0, and the most bearish reporting a price target of just $65.0.

Read the complete narrative.

Want to see why revenue is projected to compound at a breakneck pace while margins flip from deep red to healthy double digits? The narrative leans on an earnings ramp and a premium future multiple that would not look out of place in high growth tech. Curious which specific profit and valuation bridges are used to justify that gap to fair value? Dive in to uncover the assumptions driving this call.

Result: Fair Value of $79.29 (UNDERVALUED)

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

However, that bullish script could be challenged if MP stumbles on downstream execution, or if key government and tech customers rethink or delay commitments.

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

Another View: Rich on Sales, Whatever the Story

While the narrative fair value paints MP as 32.6 percent undervalued, the price to sales check tells a harsher story. At roughly 40.7 times sales versus an industry 2 times, a peer 0.8 times and a fair ratio of 2.6 times, the stock screens extremely expensive. Is momentum masking valuation risk?

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

Build Your Own MP Materials Narrative

If the current story does not quite match your view, or you would rather lean on your own research, you can build a custom MP thesis 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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