D.A. Davidson & Co. Maintains Buy on Molycorp, Raises PT from $6.00 to $8.00

In a report published Thursday, D.A. Davidson & Co. analyst Avinash Kant maintained a Buy rating on Molycorp, Inc. MCP, raising its price target from $6.00 to $8.00. According to the report, the price target raise was based on a discounted cash flow model, which applies a risk-free rate of 2% and a risk premium of 6%. Despite MCP's exposure to high-growth end markets, the analyst's have assigned a terminal growth rate of 3%. “With heavy modernization and expansion investments at the key Mountain Pass facility, Molycorp is uniquely positioned to become the most prominent, vertically integrated, low-cost supplier of rare earth materials outside of China,” the report said. “Application of rare earths in high-growth end markets such as semiconductors, hybrid and electric vehicles, wind turbines and lasers is expected to raise demand at a 9% CAGR through 2016.” Some key points from the report included: -Beneficiary of rare earth sourcing away from China. -Rare earth prices stabilize as inventory overhang abates. -Most specific company concerns are behind them. MCP closed Tuesday at $5.62.