Is MP Materials Corp. (MP) A Risky Investment?

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MP Materials Corp. (NYSE:MP) traded with a subtraction of -$0.32 to close at $24.15 on Friday, a downside of -1.31 percent. An average of 2,312,815 shares of common stock have been traded in the last five days. There was a fall of -$0.48 in the past week, and it reached a new high 7 times over the past 12 months. The last 20 days have seen an average of 2,351,309 shares traded, while the 50-day average volume stands at 1,977,114.

MP stock has decreased by -21.27% in the last month. The company shares reached their 1-month lowest point of $23.50 on 12/28/22. With the stock rallying to its 52-week high on 03/30/22, shares of the company touched a low of $23.50 and a high of $60.19 in 52 weeks. It has reached a new high 6 times so far this year and lost -46.13% or -$21.30 in price. In spite of this, the price is down -59.88% from the 52-week high.

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Insider Transactions

MP stock investors should be aware that MP Materials Corp. (MP) stock had its last reported insider trading activity 16 days ago on Dec 14. In this transaction, the insider spent $1,698,057. Director by Deputization, QVT Financial LP, disposed of 53,702 shares at a price of $31.62 on Dec 14. The insider now owns more than $1,698,057 worth of shares. Prior to that, Director by Deputization QVT Financial LP went on to Sale 100,000 shares at $31.75 each on Dec 13. An amount of $3,175,000 was transacted.

Valuation Metrics

MP Materials Corp. (MP) has a trailing price-to-earnings (P/E) ratio of 17.28. Other valuation ratios to consider include the trailing price-to-sales (P/S) ratio at 8.01, the price-to-book (PB) ratio at 3.48, and the price-to-cash flow ratio at 45.39.

Financial Health

The quick ratio of MP Materials Corp. for the three months ended September 29 was 17.30, and the current ratio was 18.20, indicating that the company is able to meet its debt obligations. Further, the company has a long term debt to equity ratio of 0.55 and a total debt to equity ratio of 0.55 for the quarter ending September 29. Its gross profit as reported stood at $255.7 million compared to revenue of $331.95 million.

For investors, determining the potential profitability of the investment also depends on the performance of the company’s management. In the past 12 months, MP Materials Corp.’s return on assets was 13.30%.

Earnings Surprise

For the three-month period that ended September 29, MP Materials Corp. had $836.29 million in cash and short-term investments compared to $677.56 million in total debt. In the quarter under review, the net income was down than the previous quarter. The company posted a net income of $63.18 million in the quarter, while revenues of $73.27 million were grew 32.32%. The analyst consensus anticipated MP Materials Corp.’s latest quarter earnings to come in at $0.3 per share, but it turned out to be $0.36, a 20.00% surprise. For the quarter, EBITDA amounted to $81.26 million. Shareholders own equity worth $177.54 million.

Technical Picture

From a technical analysis perspective, let’s take a brief look at MP Materials Corp. (MP) price momentum. RSI 9-day as of the close on 29 December was 28.52%, suggesting the stock is oversold, with historical volatility in this time frame at 83.56%.

As of today, MP’s price is $24.36 -1.95% or -$0.48 from its 5-day moving average. MP is currently trading -26.75% lower than its 20-day SMA and -35.63% lower than its 100-day SMA. However, the stock’s current price level is -15.90% below the SMA50 and -45.12% below the SMA200.

The stochastic %K and %D were 6.22% and 5.76%, respectively, and the average true range (ATR) was 1.34. With the 14-day stochastic at 6.58% and the average true range at 1.44, the RSI (14) stands at 32.61%. The stock has reached -1.62 on the 9-day MACD Oscillator while the 14-day reading was at -3.30.

Analyst Ratings

Canaccord Genuity launched coverage on MP Materials Corp. (NYSE: MP) in its analyst report released on July 13, 2022. The firm assigned the stock a Buy rating. The consensus rating for MP Materials Corp. (MP) among analysts is Buy. According to current brokerage recommendations, 0 brokerage firms advise that investors sell MP, while 1 suggest investors hold. There are 0 analysts who rate the stock as underweight. The stock is rated overweight by 1 analysts, while 10 others rate it as a “buy”.

What is MP’s price target for the next 12 months?

Analysts predict a range of price targets between $36.00 and $56.00, with a median target of $45.50. Taking a look at these predictions, the average price target given by analysts for MP Materials Corp. (MP) stock is $44.32.

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