Here’s why leading brokers name the Lynas (ASX:LYC) share price as a buy

What are the experts saying about the ASX rare earths company?

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Shares in rare earths miner Lynas Rare Earths Ltd (ASX: LYC) crawled higher today, finishing less than 1% in the green at $11.12.

Investors have been keen on Lynas shares during the last month or so, driving prices to new 52-week highs to herald the end of 2021.

A number of positive updates boosted the company’s share price throughout the year, underscored by strengths in the rare earths and lithium battery markets.

Here’s what the experts are saying about the Lynas share price.

What are brokers saying about the Lynas share price?

Macquarie analysts are bullish on the direction of Lynas shares. They say recent actions addressing the company’s operations could give Lynas a shot to widen its footprint outside Malaysia.

Specifically, analysts reckon Lynas’ strategy to move its upstream leaching and cracking operations to Australia is a solid approach to diversify from its Malaysian processing plant.

Macquarie says the shift in operations “should enable total rare earth oxide and [neodymium and praseodymium] output to more than double over the next five years from the FY21 operating level”.

The Macquaries team notes this output level equates to a compound annual growth rate (CAGR) of 16% into 2026. Macquarie, therefore, expects Lynas to outperform and values the company at $12.20 per share based on its market modelling.

Meanwhile, the team at Canaccord Genuity also recently initiated coverage on Lynas with a buy, joining the likes of Barrenjoey Markets and Cowen.

Each firm reckons Lynas is set to outperform the market substantially over the next 12 months and each has valued the company at just over $10 per share.

Ord Minnett is less constructive, however, and values Lynas at a paltry $4.60 with a ‘lighten’ rating – that is akin to a sell recommendation.

Lynas share price snapshot

Shares in the rare earths specialist soared around 155% in 2021 amid heightened demand for rare earths commodities which have buoyed the share price.

During 2021, the price of several key rare earths metals (which aren’t that rare by the way) spiked on several occasions, each boding well for the company.

In November for instance, Lynas shares gained more than 20% as the prices of neodymium and other rare earths shot higher.

December was also a good month for the company. Lynas advised its Malaysian permanent disposal facility for water leach purification residue had received regulatory approval

As such, the company closed the year on a 52-week high. And, according to Trading Economics, demand for rare earths in lithium-type batteries looks set to continue, keeping rare earths markets buoyant into 2022.

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The author has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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