MP Materials (NYSE:MP) reported first quarter earnings that topped analyst expectations, though Wedbush analysts said planned maintenance activity is expected to weigh on near-term rare earth production before output rebounds later this year.
The company posted Q1 earnings per share of $0.03, exceeding Wedbush’s forecast by $0.11 and consensus estimates by $0.06.
Wedbush said materials segment sales came in 4% above its expectations, while segment EBITDA exceeded estimates by 14%. Magnetics sales also outpaced projections, though EBITDA for the segment missed the firm’s forecast.
Wedbush analysts said MP Materials expects neodymium-praseodymium (NdPr) oxide production to decline sequentially in the second quarter due to maintenance work, before rebounding significantly in Q3, with production run rates reaching about 6,100 metric tons annually by the fourth quarter of 2026.
The analysts noted that customer engagement remains strong, adding that MP is confident in securing cash flow support through customer agreements and government contracts. Wedbush also pointed to potential upside from recycling operations and stronger NdPr pricing.
“We expect new off-takes over the next few quarters, and a path to $300 million to $400 million in magnet EBITDA,” the analysts wrote.
Wedbush wrote that realized NdPr pricing is expected to range between $90 and $95 per kilogram in the second quarter, while pricing variability should be moderated by power purchase agreement mechanisms. The firm also highlighted progress on MP’s heavy rare earth separation circuit, which is scheduled for commissioning in Q2, with initial terbium and dysprosium production expected later in 2026.
Capital expenditures are projected to rise materially in Q2 as the company advances construction activity and its 10x site expansion initiative. Wedbush estimates full-year 2026 capex at $500 million to $600 million.
Looking longer term, the analysts noted that MP aims to reduce NdPr oxide production costs to roughly $40 per kilogram through chlor-alkali integration, improved utilization rates, and other cost-reduction initiatives. Wedbush added that global NdPr demand could increase fivefold over the next decade.
The analysts also wrote that MP’s planned expansion of magnet production capacity to 10,000 tons would likely require between $1.8 billion and $2.3 billion in investment.
They added that supply constraints for NdPr oxide are expected to remain “the primary limiting factor for RE magnet production outside of China for the next 5 years, at least.”
The firm also highlighted that MP’s long-term strategy includes expanding recycling capacity, processing third-party rare earth feedstock, and developing magnets with reduced heavy rare earth content for robotics, drone, and defense applications.