Stock Analysis

Need To Know: Analysts Are Much More Bullish On MP Materials Corp. (NYSE:MP)

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NYSE:MP
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Celebrations may be in order for MP Materials Corp. (NYSE:MP) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.

Following the upgrade, the most recent consensus for MP Materials from its four analysts is for revenues of US$231m in 2021 which, if met, would be a huge 33% increase on its sales over the past 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting US$0.50 in per-share earnings. Before this latest update, the analysts had been forecasting revenues of US$208m and earnings per share (EPS) of US$0.37 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

View our latest analysis for MP Materials

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NYSE:MP Earnings and Revenue Growth May 11th 2021

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$41.00, suggesting that the forecast performance does not have a long term impact on the company's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic MP Materials analyst has a price target of US$50.00 per share, while the most pessimistic values it at US$31.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the MP Materials' past performance and to peers in the same industry. We would highlight that MP Materials' revenue growth is expected to slow, with the forecast 46% annualised growth rate until the end of 2021 being well below the historical 101% growth over the last year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 0.7% per year. Even after the forecast slowdown in growth, it seems obvious that MP Materials is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at MP Materials.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for MP Materials going out to 2025, and you can see them free on our platform here..

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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