Tuesday, November 13, 2012

Molycorp: Morgan Stanley (one of the underwriters) Lowers MCP to "Equal Weight" Following 58% Decline

Back in August Molycorp did a notes and common follow-on offering  and MS dropped their coverage in anticipation of bookrunning the stock part of the offering. The stock was at $16.62 on Aug. 1.
It is trading at $6.91 today. If I remember correctly the original Overweight was back in March in the $20's.

From Benzinga:
UPDATE: Morgan Stanley Downgrades Molycorp Citing Near-term Uncertainty, Removes PT
In a report published Tuesday, Morgan Stanley downgraded Molycorp Inc. (NYSE: MCP from Overweight to Equal-weight, and removed its price target on the stock.
Morgan Stanley noted, "We are moving to Equal-weight on MCP following Friday's disclosure of a formal order of SEC investigation pertaining to, among other things, the accuracy of the company's public disclosures. While risk-reward in the shares remains attractive, our downgrade is driven by near-term uncertainty. We have no view on the eventual outcome of this investigation; it is possible that the worst case scenario is already priced in. But given the uncertainty surrounding this issue and the possibility that it will take some time to resolve, we are moving to Equal-weight and removing our price target. Our base case valuation goes to $12 from $18 previously on higher capex.
As we said in this morning's "The Rare Earth Bubble Has Burst (MCP)":
 The thing to remember about bubbles is they don't immediately re-inflate. It seems to take anywhere from a year to a generation....