Morgan Stanley has upgraded MP Materials, calling it the best way to gain exposure to rare earths as tensions with China increase uncertainty around the global supply of critical minerals.
MP Materials (MP), which operates the only active rare earth mine in the U.S. at Mountain Pass, California, is set to become a crucial player in strengthening America’s critical mineral supply chain amid rising geopolitical tensions with China.
U.S. dependence on foreign rare earths has become a major concern after China imposed export controls on seven rare earth elements in April in response to President Donald Trump’s tariffs. Despite ongoing trade negotiations, Beijing has kept these restrictions in place, underscoring the urgency for domestic supply alternatives. Morgan Stanley analysts led by Carlos De Alba observed in a Thursday report that “geopolitical and trade tensions are finally pushing critical mineral supply chains to top of mind,” identifying MP Materials as the most vertically integrated rare earths company outside China. MP Materials’ push to develop a fully domestic rare earth supply chain, including plans for commercial magnet production, aligns with national goals to reduce reliance on foreign sources amid growing demand for advanced technologies.
The investment bank raised its rating on MP Materials to the equivalent of a buy, setting a price target of $34 per share—representing a potential 32% gain from Friday’s closing price.
MP Materials owns and operates the only active rare earth mine in the United States, located at Mountain Pass, California. China remains the dominant force in rare earth refining and processing, Morgan Stanley noted.
“Geopolitical and trade tensions are finally pushing critical mineral supply chains to top of mind,” analysts led by Carlos De Alba wrote in a note to clients Thursday. “MP is the most vertically integrated rare earths company ex-China.”
In April, Beijing imposed export controls on seven rare earth elements in retaliation for President Donald Trump’s tariffs. Despite ongoing trade discussions with the U.S., those restrictions remain in place.
On Wednesday, Trump eased certain provisions of the Defense Production Act, potentially enabling the federal government to pay above-market prices for rare earths. Morgan Stanley believes MP Materials is best positioned to benefit from this move. The company’s stock jumped more than 5% on Thursday following the news.
According to the firm, MP Materials is building out a fully domestic supply chain and expects to begin commercial production of magnets critical for electric vehicle motors, offshore wind turbines, and emerging markets like humanoid robots.
Although Morgan Stanley projects MP Materials will post negative free cash flow this year and again in 2026, analysts believe its strong balance sheet will support operations and accelerate positive free cash flow starting in 2027.
Recent policy moves have further boosted MP Materials’ prospects. On Wednesday, Trump relaxed restrictions under the Defense Production Act, potentially allowing the federal government to buy rare earths at above-market prices—a development Morgan Stanley views as a strong tailwind for MP Materials. The company’s shares rose over 5% on Thursday, reflecting investor confidence in its strategic position. While Morgan Stanley expects MP Materials to report negative free cash flow in 2025 and 2026, the firm notes the company’s solid balance sheet should support operations until positive free cash flow begins in 2027. As the U.S. seeks to secure its critical mineral supply chain, MP Materials emerges as a key contributor to addressing both economic and national security priorities.
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