J.P. Morgan Raises Estimates On Molycorp

According to J.P. Morgan, Molycorp

estimates are raised. J.P. Morgan said that it is establishing a Dec 2012 PT of $105 for MCP (replacing our previous $87 Dec 2011 target) to reflect the continued rise in rare earth prices and our belief that MCP can operate significantly below its planned capacity and still realize sharp increases in shareholder value. “In fact, we estimate MCP could operate at 50% of capacity and see current spot prices drop 40% and still generate an NPV of $105/share. We think the stock will start to move higher as four misconceptions about MCP and the sector are ultimately dispelled: 1) MCP is struggling to achieve market prices, 2) ramping production from MCP will bring on too much supply post 2014, 3) China will ultimately reverse its production and export tightening measures, and 4) new supply outside of China will chase prices and eventually bring on too much supply.” Molycorp closed on Friday at $48.93.