UPDATE: Molycorp Downgraded by Morgan Stanley

In a report issued Tuesday, Morgan Stanley downgraded its rating of Molycorp, Inc. MCP to Underweight with a target price of $2.50.

Paretosh Misra of Morgan Stanley sees that with investor confidence in Molycorp falling that there is very unattractive risk/reward and a 12 percent downside in their target for the company.

Misra does however see that with a "sharp" ramp-up in production Molycorp could cut their downside.

Even in light of the downgrade, shares of Molycorp are trading up 2.11 percent to $2.91 at last checked trade on Tuesday.