Rare Air For Rare Earths As Prices Continue To Soar
(MCP, AVL, REE, REMX)
by Jason Smith | May 3rd
http://www.tickerspy.com/newswire/?p=4410
Shares of Molycorp (MCP), the largest U.S.-based rare earths miner, are surging 9% after Dahlman Rose raised its price target on the stock to $125 from $85, reiterating its view that Molycorp is the best way to participate in near-term strength in the rare earths market. Dahlman Rose is bullish on Molycorp’s low cost structure and noted the company should be able to quickly ramp up production at its Mountain Pass facility in 2012.
Speaking of near-term strength in the rare earths market, the Rare Earths Stocks Index is soaring 5.3% today, no doubt helped by the positive revision to Molycorp’s price target, but a piece in the New York Times highlighting recent price increases in rare earths may also be playing a part. The Times article notes that prices for the elements used in a variety of products from smartphones to tablets to night-vision goggles for military use have doubled in the past four months after fourfold gains for some rare earths last year.
The reason is simple economics, as the Times reports. Demand for rare earths continues to outpace supply. China, which controls 95% of the rare earths export market, has been slashing export quotas to conserve supply for domestic use.
Shares of Avalon Rare Metals (AVL) are also rallying today, gaining 6% after Dahlman Rose initiated coverage of that stock with a “buy” rating and $15 price target, implying substantial upside from where the shares currently trade. Rare Element Resources (REE) is participating in the rare earths rally as well with a 5% pop after Dahlman Rose initiated coverage of the stock with a “buy” rating and a $21 price target, which is nearly 50% above where the shares currently trade. Market Vectors Rare Earth/Strategic Metals ETF (REMX), the rare earths ETF is up 1%.
Investors can track the Rare Earths Stocks Inde for performance trends and a suite of other metrics at tickerspy.com.
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