Al Root
USA Rare Earth's stock jumped Monday after cutting a deal with the federal government. Wall Street now is playing catch-up.
Shares of the company developing a rare-earth mine in Texas jumped 8% on Monday to $26.72 after it announced a nonbinding letter of intent with the Commerce Department to provide it with about $1.6 billion in financing. USA Rare Earth also raised another $1.5 billion in equity.
It was a big day for the company. Shares might have been up more if not for recent trading. Coming into the week, USA Rare Earth stock had risen 109% over the past 12 months, boosted by the federal government's drive to reduce America's dependence on Chinese raw materials.
China dominates global rare-earth markets with an estiamted 85% of global processing capacity. Repeated threats to restrict exports of materials used in everything from iPhones to F-35 fighter jets led the Defense Department to strike a blockbuster deal in July with MP Materials, the largest rare-earth miner in the Western Hemisphere. The deal included equity, price floors, and off-take agreements that changed the outlook for the entire sector.
"The USA Rare Earth arrangement does lack the price floors, profitability guarantees, and offtake agreements inherent in the MP deal, a structural deficiency, in our view," wrote Canaccord analyst George Gianarikas on Monday. "Management, however, is firm in their belief that an off-take agreement and pricing support are not essential to support the business model."
Gianarikas raised his target price on USA Rare Earth to $33 from $23 and maintained his Buy rating. Benchmark analyst Subash Chandra went further. Chandra tripled his target to $45, up from $15. He rates shares Buy, too.
"Transformative. We're surprised by the scale of the transaction," wrote Chandra on Tuesday. "The LOI completes the mine-to-magnet transformation and doubles magnet-making capacity."
By 2030, USA Rare Earth plans to be extracting 40,000 tons of ore per day, processing its ore as well as others, and making 10,000 tons of rare- earth magnets per year. Gianarikas estimated that the U.S. annual demand for rare-earth magnets is about 50,000 tons per year currently, and growing.
Overall, five analysts cover USA Rare Earth stock. All five rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.
The average analyst price target for USA Rare Earth stock is about $35, up from $25 before the deal.
USA Rare Earth stock was down 3% in premarket trading at $25.90, while S&P 500 futures were up 0.2% and Dow Jones Industrial Average futures were down 0.6%.
Write to Al Root at allen.root@dowjones.com
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(END) Dow Jones Newswires
January 27, 2026 09:09 ET (14:09 GMT)
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