Morgan Stanley Maintains Overweight on Molycorp, $90 PT
Morgan Stanley has published a research report on Molycorp (NYSE: MCP) as the company's shares offer a 9:1 risk-reward skew.
In the report, Morgan Stanley writes, "Given recently lowered 4Q production guidance, we expect investors to remain focused on execution. Shares rose 14% after the company announced its magnet JV. This suggests that investors will reward execution, but it also suggests a lack of confidence in execution (management had guided to a positive outcome on the JV, so the news should not have surprised the market). Molycorp targets contracting 75% of phase 1 volumes by year-end, with ~47% completed thus far. We think investors are concerned about the tight deadline, and we expect the shares to be rewarded as sales volumes are locked in."
Morgan Stanley maintains its Overweight rating and has a $90 price target on Molycorp, which is currently trading up $2.31 from yesterday's $30.83 closing price.
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