Rare earth stocks continue to draw strong investor attention, and Wall Street remains optimistic about the sector’s long-term prospects.
On Monday, William Blair analyst Neal Dingmann initiated coverage of USA Rare Earth (USAR) with an outperform rating, citing expectations that the US government will continue investing in domestic rare earth producers.
Shares of USA Rare Earth climbed 7.4% in premarket trading to $29.85, though after market open, the stock slipped to 3% up at $28.58.
The company’s stock has risen about 142% year-to-date, fueled by renewed interest in US-based rare earth production as supply chain tensions with China persist.
A growing role in US supply chain independence
In his coverage initiation, Dingmann highlighted USA Rare Earth’s position as one of the few fully integrated rare earth companies in the market.
The firm operates across several segments of the supply chain, including a research facility for proprietary extraction and purification technologies, a magnet manufacturing plant, and majority ownership of the Round Top mine in Texas.
Dingmann noted that USA Rare Earth’s magnet manufacturing facility is expected to begin production soon, supported by its acquisition of Less Common Metals (LCM), which provides metal-making and strip-casting capabilities.
“We expect the combination of these factors to generate long-term shareholder return,” he wrote.
Although the company does not yet generate significant sales, its expanding infrastructure and government support have positioned it as a strategic asset in the growing competition for critical materials.
Rare earths are essential for a range of industries, powering technologies from electric vehicles and wind turbines to defense equipment and consumer electronics.
US government support boosts industry outlook
The US government’s push to reduce reliance on Chinese supply chains has played a major role in the recent surge across the rare earth sector.
China dominates global rare earth production and processing, but its recent threats of export controls have intensified concerns about supply security in the US and Europe.
That backdrop has fueled government partnerships and investments.
In July, the Defense Department struck a major agreement with MP Materials, the largest rare earth producer in the Western Hemisphere.
The deal included an equity stake, a price floor for rare earth products, and a guaranteed customer for magnets produced at MP’s future capacity.
The agreement was viewed as a turning point for the domestic rare earth industry.
Dingmann suggested that USA Rare Earth could soon receive a sizable government investment, a development that would likely give the stock another lift.
Analysts maintain strong buy ratings despite rapid gains
Investor enthusiasm for USA Rare Earth remains high.
According to FactSet, five analysts currently cover the company, and all five rate the stock as a Buy.
The average Buy-rating ratio for S&P 500 stocks, by comparison, stands near 55%.
Analyst price targets have struggled to keep pace with the company’s rapid share appreciation.
The average target stands around $24, though recent estimates are closer to $30.
In a note accompanying his coverage, Dingmann also noted that USA Rare Earth has signed over a dozen partnership agreements for its magnet products and is in discussions with more than 70 potential customers.
During a recent visit to the company’s neodymium magnet manufacturing facility in Stillwater, Oklahoma, the analyst observed what he described as “quick production clip and expansionary bulk volumes” of critical materials.
With strong institutional support, multiple growth catalysts, and increasing government interest, USA Rare Earth has cemented its role as a key player in America’s bid to strengthen domestic rare earth production.
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