JPMorgan Upgrades Molycorp And Provides A Long-Term Forecast On Rare Earths

Business Insider reports that JPMorgan has upgraded shares of rare earth specialist Molycorp (NYSE:MCP), and raised its price target from $36 to $65.

The market news is quoted as saying:

Analyst Michael F. Gambardella cites the company’s fundraising and decision to double its capacity, along with higher prices.

The nut: “We are increasing our PT to $65 from $36. Our new price target is based on an NPV of $65, which assumes pricing at current spot levels for the next several years, gradually decreasing from the current basket price of $67/lb to a long-term average price of $18/lb for MCP’s basket starting in 2019 (a long-term price that we believe will generate attractive enough returns to allow new projects to eventually come on line). The NPV also assumes the company’s planned expansion to 40k tonnes starting in 2014, the costs outlined in MCP’s engineering study, and a 12.5% discount rate.”

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