MP Materials (NYSE:MP) shares are being underpinned by long-term electrification trends and emerging defense applications, even as near-term demand risks from consumer electronics and electric vehicles continue to cloud the outlook, according to Jefferies.
The firm adjusted its model to exclude incremental balance sheet deployment beyond existing projects, estimating MP has about $6 billion of financial flexibility over the next decade.
Analysts believe the current share price reflects existing bond yields, a long-term NdPr price assumption of around $90/kg, and roughly a 13% IRR on new projects.
Sensitivity analysis shows meaningful upside potential: a 5% increase in IRR could add about $17 per share, a 50 basis point rate cut could add $9 per share, and each $10/kg increase in NdPr prices could add roughly $7 per share.
Despite cutting revenue and earnings estimates for 2026 and 2027, Jefferies said global electrification trends could lift long-term rare earth demand. Investor interest in drone applications is also shifting from niche speculation to a more credible structural demand driver. And progress on a Saudi joint venture expected this summer could unlock an additional $2–$5 per share in value.
Operationally, MP is expected to ramp NdPr oxide production about 20% quarter-over-quarter in 1Q26, with gradual increases through the year and a targeted run-rate of nearly 6,100 tonnes by Q4 2026.
Magnet revenue is expected to build in the second half of 2026 as deliveries begin from the Independence facility, while margins are expected to remain strong as production scales. The company will also recognize $74 million in deferred magnetics revenue over the next four quarters.
Jefferies also flagged mid-2026 commissioning of heavy rare earth production at Mountain Pass, including dysprosium and terbium output, followed by samarium production by 2028.