(After Glass-Steagall MS took the investment banking business of the House of Morgan while JPM took the commercial banking biz)
With the S&P and DJIA both down over 1% Molycorp is swimming against the current, up $.91 at $45.56 just 19 cents abovc the day's low (the stock traded as high as $47.88 earlier).
From Notable Calls:
Molycorp (NYSE:MCP) is getting blessed by two tier-1 firms this morning:
- J.P. Morgan is upgrading MCP to Overweight from Neutral with a $65 price target (prev. $36).
- Morgan Stanley is reassuming MCP with an Overweight and $63 price target (41% upside) noting they see Bull Case value of $140 per share; it is based on REO prices 90% of spot and suggests a 6:1 risk/reward skew — the most attractive in firm's coverage universe.
Both of these moves come upon completion of the recent secondary (13.5mm shares sold at $50) and convertible preferred (for $180mm) offerings.
Some details:
- J.P Morgan notes the increase in their price target is to reflect the company’s decision to double its capacity to 40k tonnes starting in 2014, which should enable MCP to sell a greater amount of material, at higher prices, earlier on. Additionally, their expectation for higher medium-term rare earth prices is also pushing their target higher.
Rare earth prices continue to move higher. Rare earth prices have continued to move higher over the past several months and recently took another step up after a pause during the Chinese New Year holiday. JPM thinks this is largely due to two factors. The first is that consumers still see an undersupplied market and are willing to pay even higher prices to guarantee supply. The second is that they believe the Chinese government's increasing efforts to crack down on illegal mining and exports is reducing supply that had probably been close to 20k tonnes in previous years compared to an export quota of 30k tonnes in 2010....MORE
