Morgan Stanley Taps This Mining Stock as Top Rare Earths Play

• MP Materials (MP), the only U.S. operator of a rare earth mine at Mountain Pass, California, is upgraded to a ‘Buy’ rating by Morgan Stanley (MS) with a $32 per share target, implying a 32% upside from its $25.70 closing price, driven by its strategic importance amid U.S.-China geopolitical tensions.
• China’s export restrictions on seven rare earth elements, coupled with Trump’s easing of Defense Production Act restrictions, position MP Materials to benefit from potential above-market government purchases and growing demand for rare earths in electric vehicles, wind turbines, and robotics.
• Despite projected negative free cash flow in 2025 and 2026, MP Materials’ strong balance sheet and plans for a fully domestic rare earth supply chain, including commercial magnet production, are expected to drive positive free cash flow from 2027 onward.

MP Materials (MP), the operator of the only active rare earth mine in the United States at Mountain Pass, California, is poised to play a pivotal role in bolstering the nation’s critical mineral supply chain amid escalating geopolitical tensions with China. Morgan Stanley (MS) has upgraded MP Materials to a ‘Buy’ rating, setting a stock price target of $34 per share, which suggests a 32% upside from its Friday closing price of $25.70. The investment bank’s optimism stems from the growing strategic importance of rare earth elements, essential for applications in electric vehicle motors, offshore wind turbines, and emerging technologies like humanoid robots, as global supply chains face uncertainty due to China’s dominance in rare earth refining and processing.

The U.S. reliance on foreign rare earths has become a focal point as China imposed export restrictions on seven rare earth elements in April, a move prompted by President Donald Trump’s tariffs. Despite ongoing trade discussions, Beijing has maintained these restrictions, heightening the urgency for domestic alternatives. Morgan Stanley analysts, led by Carlos De Alba, noted in a Thursday report that “geopolitical and trade tensions are finally pushing critical mineral supply chains to top of mind,” positioning MP Materials as the most vertically integrated rare earth company outside China. The company’s efforts to establish a fully domestic rare earth supply chain, including plans for commercial magnet production, align with national priorities to reduce dependence on foreign supplies, particularly as demand grows for advanced technologies.

Recent policy developments further enhance MP Materials’ outlook. On Wednesday, Trump eased restrictions on the Defense Production Act, potentially enabling the federal government to purchase rare earths at above-market prices, a move that Morgan Stanley views as a significant tailwind for MP Materials. The company’s stock surged more than 5% on Thursday, reflecting investor confidence in its strategic positioning. While Morgan Stanley anticipates negative free cash flow for MP Materials in 2025 and 2026, the company’s robust balance sheet is expected to support its operations until it achieves positive free cash flow from 2027 onward. As the U.S. seeks to secure its critical mineral supply chain, MP Materials stands out as a key player in addressing both economic and national security imperatives.

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