Lynas Shares Garner Bullish Rating Ahead of Quarterly Results

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A leading Wall Street firm has issued a bullish call on Australian rare earths producer Lynas Corporation just days before its quarterly earnings release. Morgan Stanley upgraded the stock, choosing to focus on long-term commodity tailwinds over potential near-term earnings volatility. This vote of confidence arrives as the company's shares are already enjoying a strong run this year.

In a move that underscores a strategic outlook, Morgan Stanley raised its rating on Lynas from "Neutral" to "Overweight" on Monday morning. The bank set a new price target of A$17.55, suggesting an approximate 11% upside from Friday's closing price. The market responded positively, with the stock gaining 2% on the day, extending its year-to-date rally to roughly 26%.

The rationale behind the upgrade is particularly notable. Morgan Stanley analysts acknowledged that the imminent quarterly report, due Wednesday, January 21, might disappoint market expectations. However, they advised investors to look beyond any short-term setback, citing currently strong rare earths prices as the dominant factor for their positive long-term assessment.

Quarterly Report to Provide Crucial Updates

All eyes are now on the company's financial disclosure for the December quarter. Market expectations are high, especially following Lynas's impressive 66% year-over-year revenue growth in the previous quarter.

Looking further ahead, expert forecasts for the full 2026 fiscal year project a doubling of revenue to approximately A$1.1 billion. This anticipated growth is expected to be driven by a combination of increased production volumes and a more favorable pricing environment. Specific projections indicate that production of Neodymium-Praseodymium (NdPr) could rise by 35% to around 8,800 tonnes in FY2026.

Leadership Transition and Mixed Sentiment

Beyond the operational figures, investors are also processing the announced departure of CEO Amanda Lacaze. She will step down in June after twelve years at the helm, a period during which the company's market capitalization soared from A$400 million to nearly A$15 billion. Shareholders have remained measured in their reaction to this news, likely due to Lynas's firmly established strategic position as a key non-Chinese supplier in the global rare earths market.

Analyst sentiment, however, remains divided. While Morgan Stanley and Goldman Sachs (which turned bullish in November) express optimism, other firms like Jefferies maintain a more cautious stance. The average price target of about A$15.52 is close to the current trading level, reflecting this uncertainty regarding near-term potential.

Wednesday's report is poised to deliver critical insights. Investors will be scrutinizing updates on the progress of heavy rare earths production, the timeline for samarium production, and developments regarding the expansion of processing capacity in Malaysia.