Lynas Rare Earths Shares Struggle Amid Weak Prices and Production Miss

2 min read | January 30, 2025 01:20 PM AEDT | By Team Kalkine Media

Lynas Rare Earths Shares Struggle Amid Weak Prices and Production Miss — Image source: © Transversospinales | Megapixl.com

Why Are Lynas Shares Under Pressure?

According to CommSec analysts, the stock is in a "near-term downtrend", with many investors preferring alternative opportunities. Despite being one of the largest rare earth producers outside China, Lynas is facing several market and operational challenges.

One major issue is falling rare earth prices. Neodymium prices are down 6% since September 2024, and overall rare earth prices are 66% lower than their 2022 peak. Analysts cite muted demand and increased supply growth as key factors limiting price recovery.

In addition, Lynas reported NdPr production of 1.29kt in Q2 FY25, which was significantly below Goldman Sachs' estimate of 1.7kt. The shortfall raised concerns among investors about the company’s ability to meet production targets.

Buying Opportunity or Value Trap?

Broker sentiment on Lynas remains mixed. According to CommSec, the stock holds a neutral rating, with seven buy ratings, six holds, and three sells.

Goldman Sachs, which downgraded Lynas to neutral in October, further cut its FY25 EPS estimates by 6% in January, citing continued price pressures and slower production growth.

The broker set a price target of AU$7.40, slightly below Lynas’ estimated net asset value (NAV) of AU$7.58 per share. While Goldman acknowledges that long-term supply expansions could drive upside potential, it believes production targets will take longer to materialize, with the 12ktpa NdPr goal unlikely to be met before 2028.

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