Goldman Sachs Group, Inc. initiated a "buy" rating for MP Materials (MP.US), optimistic that its vertical integration strategy will unleash significant profit potential.

MP Materials (MP.US) saw its stock price increase by 8.61% at the close of trading on Wednesday, following the first coverage by Goldman Sachs Group, Inc., who gave a "buy" rating and a target price of $77. Analyst Brian Lee stated that the company is poised to become the largest rare earth magnet supplier in North America through vertical integration, as manufacturers seek supply chain diversification and take market share from Chinese companies that control 90%-95% of global rare earth refining and magnet production. MP Materials' core business is neodymium praseodymium oxide, a key raw material for manufacturing electronic products, electric vehicles, and permanent magnets for defense systems, which is crucial for the U.S. manufacturing industry. Lee believes that by accelerating downstream expansion through collaboration with the U.S. government, MP Materials will strategically position itself in the rare earth supply chain, achieving significant revenue and EBITDA growth, while vertical integration will increase profit margins. Furthermore, the company recently announced a joint venture with the U.S. Department of Defense and the Saudi state-owned mining company Maaden to build a rare earth refining plant in Saudi Arabia, which also contributed to the stock price increase on that day.