The Metals Company (NASDAQ:TMC) has been upgraded to an ‘Outperform’ rating by Wedbush analysts, who also boosted their price target on the deep sea mining exploration company, citing increased confidence in its long-term growth story.
The analysts upped their price target to $11 from $6. Shares traded up 14.5% at about $7.60 on Wednesday afternoon.
“We believe that TMC is well-positioned to be a key player in the critical metal supply chain due to its first-mover advantage in deep sea mining while also receiving significant US support as it looks to reduce its dependency on China in the global supply of critical rare earth minerals,” the analysts wrote.
A key positive development is an Executive Order signed by US President Donald Trump in April, which aims to boost domestic critical mineral supply. The analysts see TMC as the main beneficiary as the US government's support for seafloor nodule collection, processing, and refining has gained significant traction.
“The major theme holding TMC back was the lack of a regulatory framework, and the recent Executive Order allows the company to bypass the UN-backed ISA and receive a permit to begin commercial production in the Clarion Clipperton Zone much sooner and more likely than before the Trump Administration took over in January,” analysts wrote.
Wedbush also believes TMC is well-positioned to emerge as a critical enabler of US supply chain independence amid the ongoing US-China trade war.
“With 80%+ of US imports of rare earth metals being critical components of high-tech products in industries like semiconductors, smartphones, defense, and automotive, there is a significant urgency for the US to develop a rare earth supply chain that is not reliant on China,” they wrote.
“Others companies that will benefit from the US race to develop a domestic/allied-based supply chain include MP Materials, US Rare Earths, and Perpetua Resources, which we think could be potential partners for TMC as the US looks to develop an ecosystem to create a vertically integrated supply chain that is US-based and reduce China’s dominance in rare earth processing.”