Commodities & Metals

Crazy or Genius: Molycorp Analyst Calls for $85 (MCP, REE, REMX)

Molycorp, Inc. (NYSE: MCP) is surging yet again as the ‘rare earths’ bubble continues to inflate.  A research call today is the most optimistic case of cheerleader pom-poms being waved to date.  A firm called Dahlman Rose, which was a co-manager in the Molycorp IPO, has reiterated a Buy rating on the stock.  The biggest issue is not the ‘buy’ rating at all.  It is that its prior $49 target is now being raised to $85 per share.  Molycorp has become one of the top holdings in Rare Earth/Strategic Metals ETF (NYSE: REMX).

We have not seen the full details of the research report, so we are not going to be overly critical of it. If the $54.36 price truly generates a $4.47 billion market cap, then an $85.00 per share target would imply that Molycorp’s market cap would suddenly be  about $7 billion.

Not bad considering that the revenue story is not really even expected to take off until after 2011.  Thomson Reuters has estimates of $27.82 million in 2010 revenues and has estimates of about $53.56 million in 2011 revenues before the impact of this change today.

As noted earlier, bubbles can get out of hand and even further out of hand before the market corrects them.

JON C. OGG

Want to Retire Early? Start Here (Sponsor)

Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?

Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.

Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.