Shares in rare earth minerals player Lynas Rare Earths Ltd (ASX: LYC) are edging higher today and now trade 4% in the green at $9.29.
Today's price action signals a 9-year high for the company, having surpassed its former glory levels of $9 a share from 2012. Here's a closer look.
What's up with the Lynas share price lately?
It's been fairly quiet out of Lynas' corner over the last month or so. Nevertheless, its share price has charged northwards with authority as investors pile in to secure a spot in the company.
As the price of rare earth commodities continues in a cyclical uptrend, this bodes in well for Lynas' earnings and its share price.
For instance, in its AGM held last week, Lynas gave an upward revision on its forecast for the demand of neodymium-praseodymium (NdPr), an alloy used in numerous tech products and applications, such as electric motors.
The company now sees an annual growth rate of 10% in this division, a 300 basis point uptick from previous estimates.
Underscoring the upgrade to forecasts is the surging demand for electric vehicles, the sales of which increased by 140% during Q1 2021. This upward swing in eclectic mobility has sent the price of Neodymium itself around 68% higher since the beginning of 2021.
Investors are also paying attention to Lynas' positioning outside of China as a source of rare earths, given that China is the largest producer of this category.
As such, Lynas' offering lends diversification benefits away from a single region, which could positively impact demand and supply dynamics as well, according to previous analysis.
What else is weighing in?
Aside from the market mechanics driving the Lynas share price, sentiment appears to be overwhelmingly positive on the company right now.
For instance, the team at Sydney investment firm Barrenjoey recently initiated coverage on the stock, rating it overweight with $10.50 valuation.
Barrenjoey likes the outlook for Lynas and reckons its share price has the legs to run further yet. At the time of writing, its price target implies a 13% upside potential, which Lynas is fast encroaching.
Investors are keeping up the pace as well. The volume of Lynas shares traded today is already at 60% of its 4-week average of more than 5 million.
Lynas shareholders have enjoyed an extended run in the green, with the company's share price soaring more than 120% in that time.
This year to date, it has rallied over 133% and has gained a further 27% in the past month of trading.
