Jefferies backs USA Rare Earth (USAR.US): Vertical integration platform emerges, assigned "Buy" rating

Zhihu Finance APP has noted that Jefferies has initiated coverage on the US rare earth company USA Rare Earth (USAR.US), giving it a “Buy” rating and setting a target price of $21.

The firm expects long-term demand for rare earths to be strong and accelerate, and that the integration of Serra Verde along with increased production at the Round Top project will help the company grow into a vertically integrated battery producer.

The Jefferies analysts, led by Laurence Alexander, believe that USA Rare Earth is building a vertically integrated, mine-to-magnet rare earth elements and permanent magnet platform independent of the Chinese supply chain, with operations spanning mining, processing, metal refining, and magnet manufacturing.

Alexander pointed out that the company's near-term focus is to increase the annual magnet production capacity of the Stillwater plant in Oklahoma to about 1,200 tons by early 2027, followed by the integration of Serra Verde, which is currently the only ionic clay rare earth producer outside of Asia and the only company outside of Asia able to commercially produce all four major rare earth magnet materials.

Jefferies has also initiated coverage on several advanced materials and energy efficiency solution-related companies, believing that electrification, artificial intelligence, and the growth in defense and aerospace investment are creating robust demand, while also resulting in a series of supply bottlenecks in the critical minerals sector.

Alexander assigned new “Buy” ratings to Almonty Industries (ALM.US), Element Solutions (ESI.US), IperionX (IPX.US), and Materion (MTRN.US), and rated Fireweed Metals (FWEDF.US), NioCorp Developments (NB.US), and Standard Lithium (SLI.US) as “Hold”.